Why Trump’s iPhone tariff threat might not be enough to bring production to the U.S.

Apple CEO Tim Cook accompanied President Donald Trump on a visit to Apple’s Mac Pro manufacturing plant in Austin, Texas on November 20, 2019, but their relationship is now strained over the production of a U.S.-made iPhone. Trump expressed discontent with Cook last week and threatened a 25% tariff on iPhones in a recent social media post. Trump prefers that Apple manufactures iPhones for the U.S. market within the country rather than in India, where Apple plans to source most of its iPhones sold in the U.S. Cook confirmed this plan during recent earnings discussions. Despite Trump’s pressure, analysts suggest that it would be more cost-effective for Apple to absorb the tariff rather than relocate production back to the U.S. Apple’s profitability could be impacted, with UBS analyst David Vogt estimating a potential 51 cents per share drop in annual earnings due to the tariffs. Producing iPhones in the U.S. is considered unfeasible and costly by experts, with labor expenses likely to increase significantly. Apple’s manufacturing operations in India have expanded in recent years, with Foxconn constructing a new factory that could handle some iPhone production. The outcome of Trump’s tariff threat on India-made iPhones remains uncertain, with speculation that Apple may need to raise prices in the U.S. or challenge the tariffs in court.