iPhone Prices Could Soar to $3,500 if Made in the US: A Look at the Challenges

President Donald Trump's push for US-made iPhones faces significant economic hurdles, potentially tripling the device's cost.

US President Donald Trump has expressed a strong desire to see iPhones manufactured within the United States, even going so far as to suggest tariffs on Apple products if production remains overseas. During his "Liberation Day" address, Trump emphasized his vision for a resurgence of American manufacturing. He has directly communicated to Apple CEO Tim Cook his expectation that iPhones sold in the US be produced domestically. Trump stated on Truth Social, "If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.”

However, experts suggest that this shift could have significant financial ramifications. Dan Ives, global head of technology research at Wedbush Securities, estimates that US-made iPhones could cost over three times their current price, potentially reaching $3,500. This price hike is primarily due to the complexity of replicating the existing, highly specialized, and cost-effective supply chain currently centered in Asia. Ives mentions that building the necessary fabrication plants (fabs) and supply chains in the US, such as in West Virginia and New Jersey, would contribute to the increased costs.

The logistical challenges are also considerable. Ives estimated that it would take Apple approximately three years and an investment of around $30 billion to move just 10% of its supply chain to the US. The shift of smartphone manufacturing to Asia occurred decades ago as American companies focused on software development and product design, which offer greater profit margins. This decision has allowed Apple to become one of the world's most valuable companies and a dominant force in the smartphone market.

Apple's stock has faced pressure since Trump's inauguration, declining by over 14% due to concerns regarding the impact of tariffs on its extensive supply chain, which is heavily reliant on China and Taiwan. Ives indicates that about 90% of Apple's iPhone production takes place in China. The components that power iPhones are mainly manufactured in Taiwan, with screen panels supplied by South Korean companies, while some other components are made in China, where final assembly primarily occurs.

While the administration has exempted smartphones and other electronics containing semiconductors from heightened "reciprocal" tariffs on China, Apple still faces a 20% tariff on Chinese goods linked to the fentanyl trade. Apple CEO Tim Cook has stated that the majority of iPhones entering the United States will now be shipped from India, and tariffs could increase Apple's costs by $900 million this quarter. Apple announced in February its plans to invest $500 billion in the US over the next four years as part of an effort to expand production outside China and to navigate Trump's tariffs. Apple has sought to diversify its production bases away from China, including to India and Brazil.

Gene Munster, managing partner at Deepwater Asset Management, believes that Apple would find it difficult to avoid raising iPhone prices if faced with 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.”