Trump Threatens An Iphone Tariff

President Trump wants the shiny pocket computers you’re always attempting to spend less time on to come from American factories. Yesterday, he threatened to impose a tariff of 25% or more on iPhones if Apple doesn’t manufacture them stateside.

The president later clarified that the duty would apply to all smartphone brands, including Samsung.

Trump’s not a fan of Apple’s preferred method of supply chain diversification: Earlier this month, he told CEO Tim Cook that he doesn’t like Apple’s plan to have more iPhones built in India as part of its effort to diversify from China.

Meanwhile…Trump separately floated a 50% tariff on all European Union imports, citing the “unacceptable” trade deficit with the bloc, a threat that came hours before US–EU trade negotiations were set to begin. The surprise tariff talk sent Apple’s stock down 3% yesterday, while the STOXX Europe 600 index sank nearly 1%.

An American iPhone still likely won’t happen

Industry experts say that manufacturing iPhones in the US is as economically feasible as having McDonald’s replace its Big Mac patties with Kobe beef.

• Apple currently makes 80% of its US-bound iPhones in China, where it has built out an intricate supply chain and can draw from a deep pool of relatively cheap labor and expertise.
• Wedbush analyst Dan Ives estimated that it would take as long as 10 years to build up US iPhone manufacturing capacity and that the domestic phones would retail at $3,500.

It’s not a new problem: Steve Jobs told President Obama in 2010 that the US lacks the technical know-how to assemble smartphones, saying “those jobs aren’t coming back.”

Analysts expect that Apple would likely opt to continue to import iPhones and pay the tariff, which they say would cut into its margins and lead to pricier phones for customers.

Apple is already investing in the US…recently pledging to spend $500 billion building data centers and a Houston facility that will manufacture servers for its AI product Apple Intelligence. Some analysts believe it could commit to some limited US production of consumer products to appease Trump.—SK