President Donald Trump’s proposal to have Apple manufacture iPhones in the U.S. to avoid new tariffs has sparked skepticism among analysts, who doubt the feasibility and cost-effectiveness of such a move.
Needham analyst Laura Martin expressed her doubts on CNBC’s “The Exchange,” stating, “I don’t think that’s a thing,” in response to White House Press Secretary Karoline Leavitt’s comments about Apple bringing iPhone manufacturing to America. Martin believes that if Apple were to start building its marquee iPhone in the U.S., its costs would skyrocket.
Martin is not alone in her concerns. Wedbush analyst Dan Ives estimated that an iPhone produced in the U.S. could cost as much as $3,500. The process of relocating Apple’s supply chain to the U.S. would be lengthy, taking years, and according to most supply chain experts, making iPhones entirely in the U.S. is not feasible.
Leavitt, when questioned about iPhone production moving to the U.S., stated that Trump aims to bring manufacturing jobs back to America. She emphasized that Trump believes the U.S. has the necessary workforce and resources to manufacture iPhones domestically. Leavitt also highlighted Apple’s $500 billion investment in the U.S., suggesting that this demonstrates the company’s confidence in the country’s capabilities.
Investors are selling off Apple shares due to concerns about the company’s manufacturing exposure to China, which is facing a cumulative tariff rate of 104% following Trump’s retaliatory measures. Other countries where Apple manufactures, such as India and Vietnam, are also subject to levies. According to Martin, Trump’s tariffs will increase Apple’s costs by approximately 50%.
Apple’s stock has taken a hit, plummeting around 20% over the past five trading days as investors assess the implications of Trump’s plan. UBS estimated that Trump’s reciprocal tariff plan could force Apple to increase the price of its high-end iPhone 16 Pro Max by $350 for U.S. consumers. Martin warned that passing on these cost increases to consumers could drive inflation higher.
Analysts have not adjusted their earnings estimates for Apple due to the uncertainty surrounding trade policy. Martin advises investors to exercise caution before buying into the dip, as the company may face further downside if the levies are implemented as planned or if it encounters other shocks. Martin listed potential “worst cases” for Apple, including retaliatory measures from China or China invading Taiwan.
