President Donald Trump’s tariff war could have far-reaching effects on manufacturing, especially the tech industry, with a tech analyst warning that iPhone prices could rise to $3,500 if production is moved to the US.
When President Donald Trump announced the increase in import tariffs from different countries in his Liberation Day speech, his promise to Americans was to attract industries that would create millions of jobs. Trump argued that with the tariffs so high, multinational manufacturing companies would be forced to relocate production to the United States of America.
However, a tech industry analyst has described Trump’s expectation as a fictional tale that may not manifest. Dan Ives, global head of technology research at financial services firm Wedbush Securities, warned that if tech giants like Apple relocate production to the United States of America, they would lose out on the advantages they currently enjoy and could end up tripling their production costs.
Ives told CNN that if Apple Inc. moved production of the iPhone and other gadgets to the US, the unit price of the item could sell at $3,500 per unit, more than three times the current cost at $1,000. He explained that for such a relocation to happen, Apple would need to replicate in the US the highly complex production ecosystem that currently exists in Asia, including the fabrication plants and high-tech manufacturing facilities that produce its computer chips.
Ives explained that the making and assembling of smartphone parts was shifted to Asia some decades ago due to the competitive advantage, while companies in America were left to focus on software development and product designs. He added that screen panels for iPhones are made by South Korean companies, while the chips are made in Taiwan. Other components are made in China, and this is where the assembling takes place.
He added that Apple could spend as much as $30 billion over a period of three years, just to move 10% of its supply chain from China and Taiwan, to the US.
The analyst explained that the tariffs would result in steep price hikes for American consumers on a range of products from clothing to electronics and gadgets. Since Trump’s inauguration in January, many tech stocks have taken a hit, with Apple losing about 25% of its share value. The recent tariff increase announcement was the final straw, with stocks around the world suffering a dip.
China has responded to the US tariff increase, causing what many say will be a vicious standoff. Trump replied that China would be hit by another 50% levy for retaliating in kind to the earlier announced 34% tariff. China has blasted what it called US blackmail and vowed to “fight it to the end”, fanning worries the crisis could spiral out of control.
