Apple Would Rather Absorb A 25% iPhone Tariff Than Move Production To The US, Says Analyst: '...No Guarantee They Won't Face Repeated Tariff Threats During His Term'
Apple is unlikely to move iPhone production back to the U.S. despite President Trump's demand to avoid a 25% tariff, according to analyst Ming-Chi Kuo. Kuo stated that absorbing the tariff is more profitable for Apple than relocating assembly lines. Trump's comments reflect political pressure rather than economic necessity, as Apple continues to invest in India. Despite a recent drop in Apple shares, the company remains committed to its manufacturing strategy in India, which is projected to increase its share of global iPhone production significantly by 2025.
On Friday, President Donald Trump demanded that Apple Inc. AAPL manufacture iPhones sold in the U.S. domestically, or face a 25% tariff. Now, top Apple analyst Ming-Chi Kuo said that the company is unlikely to move its assembly lines back to the U.S., even under political pressure.
What Happened: "In terms of profitability, it’s way better for Apple to take the hit of a 25% tariff on iPhones sold in the U.S. market than to move iPhone assembly lines back to U.S.," Kuo wrote.
Trump's comments came in response to Apple's growing investment in India, where key supplier Foxconn, officially known as Hon Hai Precision Industry Co. Ltd HNHAF, is building a $1.5 billion display module plant near Chennai.
Trump criticized Apple for shifting production to India and warned CEO Tim Cook that iPhones sold in the U.S. should be "manufactured and built" domestically.
Kuo called the threat more political than economic. "The specific tariff percentage Trump proposes on iPhones isn't the main concern," he said. "The bigger issue is that this is Trump's second recent pointed comment targeting Apple—a warning sign Apple can't ignore."
He added that even if Apple negotiates a temporary reprieve, the risks won't disappear.
"Moving all iPhone assembly for US models back to the US before Trump's term ends is unrealistic, and Trump also opposes Apple producing iPhone US models in India," Kuo stated, adding, "Even if Apple secures a temporary deal with Trump to avoid iPhone tariffs this time, there's no guarantee they won't face repeated tariff threats during his term."
Why It's Important: Earlier this month, Trump said, “I had a little problem with Tim Cook yesterday,” adding, “I said to him, ‘my friend, I treated you very good. You’re coming here with $500 billion, but now I hear you’re building all over India.’ I don’t want you building in India.”
“I said, ‘Tim, look, we treated you really good, we put up with all the plants that you built in China for years, now you got to build us. We’re not interested in you building in India, India can take care of themselves … we want you to build here,'” Trump said.
Following this, Indian sources stated that Apple has reiterated its commitment to India as a major manufacturing center, highlighting that there has been "no change" in the company's investment strategy.
A report by Counterpoint Research noted that India accounted for 18% of global iPhone production in 2024, with projections suggesting this could rise to 32% in 2025.
Price Action: Apple shares fell 3.02% during Friday’s regular trading session but rebounded slightly with a 0.30% gain in after-hours trading, according to Benzinga Pro.
Benzinga Edge Stock Rankings gave Apple a growth score of 33.12%. Click here to compare it with other major players.
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