US President Donald Trump boasted “jobs and factories will come roaring back” when he unleashed unprecedented tariffs around the world during his “Liberation Day” address last month. But there’s one product the president is particularly eager to produce in the US: iPhones. “I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” Trump posted Friday morning on Truth Social. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.” But Dan Ives, global head of technology research at financial services firm Wedbush Securities, told CNN’s Erin Burnett in April that idea is a “fictional tale.” US-made iPhones will likely cost more than three times their current price of around $1,000, Ives said, because of the costs associated with replicating the highly complex production ecosystem that currently exists in Asia. “You build that (supply chain) in the US with a fab in West Virginia and New Jersey. They’ll be $3,500 iPhones,” he said, referring to fabrication plants, or high-tech manufacturing facilities where computer chips that power electronic devices are normally made. And even then, it would cost Apple about $30 billion and three years to move just 10% of their supply chain to the US to begin with, Ives told Burnett. CNN has reached out to Apple for comment regarding Trump’s Friday remarks. The making and assembly of smartphone parts shifted to Asia decades ago, as American companies largely focused on software development and product design, which generate much higher profit margins. That move has helped make Apple one of the world’s most valuable companies and cement itself as a dominant smartphone maker. Since Trump’s inauguration in late January, Apple’s shares have lost more than 14% of their value due to concerns about the impact of tariffs on its sprawling supply chain, which is highly dependent on China and Taiwan. About 90% of Apple’s iPhone production takes place in China, according to Ives. “That’s why I think you see what’s happened to the stock, because no company is more caught up in this tariff front and center in this category five storm than Cupertino and Apple,” he said in April. “It’s an economic Armageddon, but especially for the tech industry.” The chips that power iPhones are mainly manufactured in Taiwan, while its screen panels are supplied by South Korean companies. Some other components are made in China, and final assembly mostly takes place in the country. The administration’s exemption of smartphones and other electronics containing semiconductors from the elevated “reciprocal” tariffs on China has spared iPhones from the harshest levies, but Apple still faces a 20% tariff on Chinese goods for the country’s role in the fentanyl trade. Apple CEO Tim Cook said on the company’s most recent earnings call that “the majority” of iPhones coming into the United States will now be shipped from India, adding that tariffs could add $900 million to Apple’s costs this quarter. In February, Apple announced it would invest $500 billion in the United States over the next four years as part of its effort expand production outside China and to avoid Trump’s tariffs on the country. Apple has been seeking to diversify its production bases from China to India and Brazil. But Gene Munster, managing partner at Deepwater Asset Management, estimates it would be difficult for Apple not to raise iPhone prices if it faces tariffs of 30% or higher. “Anything below 30, they will probably carry the vast majority of that increase,” he said. “But I think at some point they’re going to have to start to share it.”
iPhone could triple in price to $3,500 if they’re made in the US, analyst warns
TruthLens AI Suggested Headline:
"Analyst Predicts iPhone Prices Could Surge to $3,500 if Manufactured in the U.S."
CNN
7.6
TruthLens AI Summary
In a recent address, President Donald Trump emphasized the need for Apple to manufacture iPhones in the United States, threatening a 25% tariff on the company if it continues to produce the devices abroad. This declaration aligns with Trump's broader strategy of bringing jobs back to America through tariffs, which he believes would stimulate domestic manufacturing. However, industry experts like Dan Ives from Wedbush Securities have dismissed the feasibility of this plan as unrealistic. Ives warned that if Apple were to shift its production to the U.S., the cost of an iPhone could soar to approximately $3,500, a drastic increase from its current price of around $1,000. The complexity of establishing a new supply chain in the U.S., especially for components that are currently sourced from Asia, would require significant investment and time, estimated at around $30 billion and three years to relocate just 10% of the supply chain.
The majority of Apple’s iPhone production is currently based in China, where about 90% of the devices are assembled. The company has already been feeling the financial strain from tariffs, with shares dropping over 14% since Trump's inauguration due to concerns about the impact of these trade policies on its supply chain. While Apple is attempting to diversify its manufacturing by shifting some production to India and Brazil, analysts believe that if tariffs continue to rise above 30%, Apple would inevitably have to increase prices for consumers. CEO Tim Cook indicated that the company is already facing an additional $900 million in costs this quarter due to tariffs. The situation reflects a broader challenge in the tech industry, where reliance on global supply chains makes it vulnerable to geopolitical tensions and tariff policies.
TruthLens AI Analysis
The article sheds light on the potential implications of producing iPhones in the United States, particularly in the context of recent political statements and economic forecasts. It presents a scenario where the cost of an iPhone could skyrocket to $3,500 if manufacturing were to shift back to US soil, a projection made by analyst Dan Ives. This situation is framed within the broader narrative of American manufacturing resurgence championed by political figures like former President Trump.
Political Context and Economic Reality
The article highlights Trump's push for Apple to manufacture iPhones domestically, reflecting a broader trend of protectionist policies aimed at revitalizing American manufacturing. Trump's assertion that Apple should produce iPhones in the US, alongside the threat of tariffs, underscores a significant political stance that aims to appeal to American workers and voters. However, this desire clashes with the reality of the global supply chain, as emphasized by Ives, who argues that such a move is economically unfeasible due to the high costs associated with establishing a new manufacturing ecosystem in the US.
Supply Chain Challenges
The complexities of the current production setup are emphasized, illustrating the decades-long shift of manufacturing to Asia, where costs are lower and the supply chain is more efficient. Ives' estimate that it would cost Apple about $30 billion and take three years to move just a fraction of its supply chain to the US indicates the scale of the challenge involved. This serves to highlight the economic implications of Trump's proposed tariffs and the potential for significant price increases for consumers.
Public Perception and Investor Sentiment
The article aims to inform the public about the contentious debate surrounding manufacturing in the US and the potential fallout for consumers and investors. By presenting a dramatic price increase scenario, it provokes thought regarding the consequences of protectionist policies on everyday products. Additionally, given the recent decline in Apple’s stock value, the article touches on investor concerns about the effects of tariffs on the company’s business model, further complicating public sentiment towards such political rhetoric.
Potential Impact on Society and Economy
The implications of this news story are multifaceted. Should iPhone prices rise significantly, it could lead to consumer backlash, ultimately affecting Apple's market position and broader economic trends. Additionally, the article serves to frame the discussion around local manufacturing and its feasibility, potentially influencing public opinion and political discourse.
Target Audience
This article seems to resonate more with economically-minded individuals, tech enthusiasts, and those concerned about the future of American manufacturing. It likely aims to reach an audience that is both politically aware and interested in the implications of economic policies on technology and consumer goods.
Market and Global Influence
The potential ramifications of this news on the stock market and global economy are notable. Investors in Apple and other tech companies that rely on international supply chains may react negatively to the threat of increased production costs and tariffs. This could lead to broader market volatility, particularly in technology sectors that are sensitive to manufacturing costs.
In conclusion, while the assertions made in the article may seem extreme, they reflect real concerns regarding the intersection of politics, economics, and technology. The narrative crafted by the article serves to provoke thought and discussion about the future of manufacturing in the US, consumer costs, and the potential for economic manipulation through policy.