Analyst Suggests Apple Should Absorb 25% Tariff in the U.S. to Maintain Profitability, Citing Increased Costs of Shifting iPhone Production

Recently, U. S.President Donald Trump made headlines with his assertion that he anticipates Apple CEO Tim Cook will relocate iPhone production to the United States. He warned that failing to do so could lead to a substantial 25% tariff imposed on these devices. However, industry analysts suggest that absorbing these tariffs might be a more viable financial strategy for Apple rather than undertaking the significant capital investment required to shift production stateside.

Economic Viability of U. S.Production

After Trump’s announcement regarding tariffs, Apple commenced efforts to diversify its supply chain away from China, aiming to mitigate potential losses tied to over-reliance on a single manufacturing region. This involved innovative tactics to transport equipment from China to alternative locations, effectively bypassing potential regulatory setbacks.

Ming-Chi Kuo, an analyst at TF International Securities, has weighed in on the matter, recommending that Apple should consider absorbing the proposed 25% tariffs instead of moving iPhone manufacturing to the U. S.Trump’s confidence in the feasibility of domestic manufacturing overlooks the enormous financial implications, including investment in production facilities and hiring skilled labor necessary to make this transition successful.

In terms of profitability, it’s way better for Apple to take the hit of a 25% tariff on iPhones sold in the US market than to move iPhone assembly lines back to US.https://t.co/ycTwPmQyEp pic.twitter.com/VPRRpj0caU

— Ming-Chi Kuo (@mingchikuo) May 23, 2025

Additional insights from Bloomberg’s Mark Gurman emphasize that shifting iPhone production to the U. S.is highly improbable. In the hypothetical scenario that it occurred, production rates would likely decline significantly from current levels in China, necessitating a drastic increase in product pricing to offset the higher labor costs.

While a partial transition of certain products, such as MacBooks, may be feasible since they require lower production volume, full-scale iPhone manufacturing in the U. S.seems unrealistic. Consequently, Apple may need to accept the burden of the 25% tariff as a means to sustain profitability in the long run.

For further insights, you can check out the original source: Ming-Chi Kuo.

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