Apple is once again at the center of controversy: the President of the United States, Donald Trump, has renewed pressure on the company to move iPhone manufacturing to the country. He threatened to impose a 25% tariff on all devices sold in the U.S. that are not domestically produced.
But according to analyst Ming-Chi Kuo, one of the most respected voices when it comes to Apple, the company is likely to choose a simpler — and less costly — option: paying the tariff.
Cheaper to Pay Than to Move
Kuo explained that, from a financial perspective, it makes more sense for Apple to absorb the cost of the tariff than to relocate its entire complex production chain to the United States.
As most people know, most final iPhone assembly takes place in Asia, primarily in China and, increasingly, in India.
Shifting all of this would not only require billions of dollars in investments but also pose enormous logistical and labor challenges.
Today, Apple relies on a supply chain that took decades to build, with massive partners like Foxconn and Pegatron, operating factories with a scale and efficiency that are difficult to replicate anywhere else — especially in the U.S., where costs are significantly higher.
India Becomes a Key Player
In fact, Apple’s strategy is focused on diversifying production — but not to the United States.
According to Bloomberg, the company plans to shift a significant portion of iPhone production for the U.S. market to India by 2026.
The goal is to manufacture over 60 million units per year there, with Foxconn investing heavily — about $1.5 billion — in new facilities in the country.
Trump, however, continues to ramp up the pressure.
In a recent statement, he reiterated that he had “long informed Tim Cook that he expects iPhones sold in the U.S. to be made there, not in India or anywhere else.”
Therefore, iPhone production in India is becoming a growing concern for Tim Cook.
Producing in the U.S.? Too Expensive
The numbers don’t add up: according to analysts at Wedbush Securities, if Apple were to manufacture iPhones in the U.S., the cost per unit could reach $3,500.
Considering that the U.S. is one of Apple’s largest markets, with over 120 million users and around 60 million devices sold each year, the company may prefer paying the tariff to keep its global supply chain intact.
Financial markets reacted negatively to Trump’s threat. Apple’s shares dropped by as much as 3% in pre-market trading following the former president’s remarks.
