As Trump Threatens to Impose Tariffs on Iphones, Apple's Stock Falls. This is Why It's Misguided

Shares of Apple Inc. dropped over 3% in premarket trading Friday following a warning from former President Donald Trump that the company could face a 25% tariff if it doesn’t manufacture iPhones within the United States. Trump expressed his dissatisfaction with Apple’s overseas production practices, particularly in India, and insisted that iPhones sold in the U.S. should be made domestically.

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In a post on his Truth Social platform, Trump stated he had already informed Apple CEO Tim Cook of his expectation that iPhones destined for the U.S. market should be built in America—not in India or any other foreign country. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.,” he added.

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Despite Trump’s demands, analysts remain skeptical about the feasibility of shifting iPhone production to the United States. Evercore ISI previously assessed the situation in April and concluded that manufacturing iPhones domestically would drastically raise costs. The firm estimated that higher labor expenses alone would lead to a more than 50% increase in the cost of producing an iPhone—significantly more than the 25% tariff Trump is now threatening.

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Evercore noted that even if Apple were to face a 50% global tariff, building iPhones in the U.S. would still be economically unsound. “It just wouldn’t make sense financially,” the analysts stated.

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This isn’t the first time Trump has clashed with Apple over its manufacturing strategy. Earlier this month, he mentioned having a “little problem” with Tim Cook during a meeting in Qatar, citing concern over the company’s growing investment in India.

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While Apple has made significant efforts to diversify its supply chain away from China—largely in response to pandemic-era disruptions and rising geopolitical tension—the company has not begun smartphone production in the U.S.

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Instead, Apple has turned to countries like India and Vietnam. The transition has been part of a broader strategy to reduce reliance on Chinese factories. Still, the Trump administration continues to pressure Apple to repatriate manufacturing to American soil.

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MarketWatch reached out to Apple for comment on the issue, but the company did not immediately respond.

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Some analysts have voiced concerns about the economic implications of Trump’s proposed tariffs. Dan Ives, a tech analyst at Wedbush Securities, emphasized that the components used in iPhones are primarily sourced from international suppliers. Earlier this year, he warned that applying steep tariffs could fundamentally alter the technology sector in the U.S. for years to come.

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In an April research note, Ives estimated that a U.S.-built iPhone could end up costing around $3,500—more than triple the current average price of roughly $1,000. On Friday, he reinforced this prediction, labeling the idea of American iPhone production as unrealistic. “Building iPhones in the U.S. would result in a price point that’s a non-starter for Cupertino,” Ives said. “It would translate into iPhone prices of about $3,500 if made in the U.S.”

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He also mentioned that the logistics of such a shift would be highly complex, requiring at least five to ten years to complete. He described the entire scenario as “a fairy tale that is not feasible.”

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Other analysts echoed similar concerns. Gimme Credit analysts remarked in April that moving any significant portion of iPhone production to the U.S. wouldn’t be possible in the short term. They cited the enormous financial and time investments required to build the necessary infrastructure.

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“Constructing suitable facilities and establishing an efficient supply chain would take substantial resources,” they wrote. “And more importantly, the U.S. labor market may not have the required skills or workforce capacity to handle such a scale of production.”

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Moreover, even if Apple managed to open domestic production facilities, it would still need to import many components from abroad—particularly from China, which remains a crucial part of the company’s supply chain.

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Bloomberg reported that India accounted for about 20% of global iPhone production over the past year, churning out over 40 million units by the end of March. The same report indicated that Apple intends to produce the majority of iPhones sold in the U.S. in India by the end of 2026. This shift underscores Apple’s commitment to diversifying its manufacturing base while still relying on more cost-effective overseas operations.

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In short, while Trump’s proposal may appeal to certain political or economic interests, experts overwhelmingly view the idea of U.S.-based iPhone production as highly impractical given current global dynamics, labor costs, and supply chain realities.

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