US President Donald Trump has said that «jobs and factories will return in triumph» by announcing unprecedented tariffs. At the same time, however, the US may face a significant rise in product prices.
With the new global tariffs already in place, a significant increase in the price of goods — from clothing to electronics — will be borne largely by American consumers. One of the leading technology analysts warns that if the iPhone is produced in the United States, its price could increase several times.
Why will iPhone go up in price?
The president and his economic team promise that the tariffs will bring numerous manufacturing jobs back to the US, employing millions of Americans. However, Dan Ives, director of technology research at Wedbush Securities, called this idea «a made-up story» on CNN.
According to him, the American iPhone would cost more than three times as much — about $3500, as it would have to recreate the extremely complex manufacturing ecosystem that currently exists in Asia.
«To create such a supply chain in the United States — with factories in West Virginia or New Jersey — would require enormous costs. It’s going to be $3500 iPhones»,” he said, referring to the microchip factories.
Moreover, Apple will have to spend about $30 billion and 3 years to move only 10% of its production chain to the United States, Ives added.
The production of components and assembly of smartphones has been taking place in Asia for decades, while American companies have focused on software development and architecture, which brings higher profits. This is what helped Apple become one of the most valuable companies in the world and a leader in the smartphone market.
Since Trump’s inauguration in January, Apple’s stock has fallen about 25% as investors worry about the impact of tariffs on the company’s complex supply chain, which is heavily dependent on China and Taiwan. About 90% of iPhones are assembled in China.
«That’s why stocks are so down — no other company has been hit by the tariff storm like Cupertino-based Apple», Ives said. «It’s economic armageddon, especially for the tech sector».
Processors for iPhones are mostly made in Taiwan, screens — in South Korea, other components — in China, and final assembly — in China.
In February, Apple announced an investment of $500 billion in the United States over the next 4 years as part of its efforts to move production out of China and avoid Trump’s tariffs.
Tech analysts agree that iPhone prices will rise even if the supply chain does not change. In a study, Rosenblatt Securities said that the cost of an iPhone could rise by 43% if Apple passes the entire cost of the new tariffs on to consumers.
Neil Shah, vice president of research at Counterpoint Research, believes that the price increase could be as high as 30%, depending on the country of manufacture.
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