Trump's Apple Tariff Threat Hits Stock Hard, But Here's Why iPhones Can't Just Be 'Made in America'

President Donald Trump has issued a stringent ultimatum to Apple Inc. AAPL. He has demanded that the tech behemoth start manufacturing iPhones within the United States or be prepared to face a minimum 25% tariff on iPhones produced overseas.

What Happened: The Apple shares fell 3% on Friday. The company has slipped roughly 20% year-to-date, as escalating pressure from Trump's threats converges with rising doubts about the company's position in the fast-evolving AI landscape.

Trump is the latest in a series of attempts over the past decade to persuade Apple to shift its supply chain to the US. Despite these efforts, Apple has chosen to relocate its production from China to other Asian countries such as India, Vietnam, and Thailand. It is estimated that China still manufactures around 80% of iPhones.

In a post on his Truth Social platform, Trump wrote he had “long ago informed Tim Cook of Apple that I expect their iPhone's that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else.”

According to a report by The New York Times, industry analysts, including Wayne Lam from TechInsights, believe that moving iPhone production to the US would be an expensive and challenging endeavor, potentially causing iPhone prices to soar to $2,000 or more.

Also Read: Apple Raises iPhone Trade-In Prices In China To Fend Off Huawei, Xiaomi Amid Lagging Sales

This would require Apple to make significant investments in new machinery and heavily depend on automation due to the smaller US population.

Experts in supply chain management consider the proposed shift to US production in 2025 as ill-advised, given the iPhone’s age and the possibility of it being superseded by AI-based devices within the next decade.

Apple’s previous attempt at US-based assembly for Mac desktop computers in 2013 encountered significant challenges, including labor issues and supply chain complications.

Even though Apple has increased iPhone production in India to circumvent local import taxes, the company continues to rely heavily on China for the assembly of intricate iPhone components.

Why It Matters: This ultimatum from President Trump underscores the ongoing tension between the US government and Apple over the company’s manufacturing practices. The proposed tariff could significantly impact Apple’s bottom line and potentially lead to higher prices for consumers.

The situation also highlights the broader issue of global supply chains and the challenges companies face in balancing cost, efficiency, and political pressures.

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Image: Shutterstock/Novikov Aleksey