Trump threatens 25% tariffs on Apple if iPhones not US made

[WASHINGTON] Apple faces escalating pressure from President Donald Trump to do what many analysts insist would be nearly impossible: move production of its iconic iPhone to the US from overseas.

Trump on Friday (May 23) threatened Apple with a tariff of at least 25 per cent if it does not manufacture its flagship product line in the US, his starkest demand yet for the tech giant to commit to more domestic assembly. The warning came days after a Tuesday meeting between the president and Apple chief executive officer Tim Cook at the White House, a US official said.

“I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the US of America will be manufactured and built in the US, not India, or anyplace else,” Trump said in a post on Truth Social on Friday. “If that is not the case, a Tariff of at least 25 per cent must be paid by Apple to the US”

Apple’s stock fell as much as 3.9 per cent in New York trading. Separately on Friday, Trump also threatened a 50 per cent tariff on the European Union that would go into effect Jun 1, which weighed on the broader market.

Trump’s demands for US-based manufacturing pose a stark challenge to the company, whose supply chains for its popular phones have been concentrated in China for years. The US lacks the rich ecosystem of Apple suppliers, manufacturing and engineering know-how that – for now – can only be found in Asia.

“This is a clear negative,” KeyBanc Capital Markets analyst Brandon Nispel said in a note. “For Apple, it seems as if it must now raise prices on iPhones, which will likely occur with the launch of the iPhone 17. However, in the near term, it likely implies a more significant gross margin impact.”

The change threatens to cut Apple’s gross margin by three to 3.5 percentage points in fiscal 2026, according to Bloomberg Intelligence. But moving iPhone production to the US would likely still be far more costly than paying the tariff. And analysts have estimated that US-made phones would ultimately cost consumers thousands of US dollars apiece.

Trump’s warning took shape after Apple signalled earlier this month that new tariffs would bring as much as US$900 million in higher costs in the current quarter. To limit the impact of import levies on goods made in China, Apple had already planned to transfer the bulk of its US-bound iPhone production to facilities in India – a move that had drawn increasing Trump ire.

Last week, during his trip to the Middle East, Trump said he had asked Cook to stop building plants in India to make devices for the US, pushing the iPhone maker to add domestic production as it pivots away from China.

“I had a little problem with Tim Cook yesterday,” Trump said of his conversation. “He is building all over India. I don’t want you building in India.”

Apple said earlier this year that it plans to spend US$500 billion in the US over the next four years, which will include work on a new server manufacturing facility in Houston, a supplier academy in Michigan and additional spending with its existing suppliers in the country.

But that stops short of the full shift to US-based production envisioned by Trump. Moving manufacturing of its signature iPhone and other devices to the US would be an enormous undertaking for the Cupertino, California-based company.

Apple’s biggest FATP facilities – short for final assembly, test and pack-out – are massive and incomprehensible to many people outside of Asia. They are almost towns themselves, with several hundred thousand people, schools, gyms, medical facilities and dormitories. One major iPhone factory, a complex in Zhengzhou, has even been dubbed iPhone City.

Development of new iPhones and other products still starts at Apple’s labs in Silicon Valley. But working with Asia-based component suppliers and other partners begins long before a product actually hits the market. Apple engineers and operations experts spend months or years working closely with Foxconn Technology Group, Pegatron Corp. and other suppliers to customise assembly of new devices.

One popular counterpoint is that Apple should use its cash hoard to buy thousands of acres in the US and create a fully robotic and automated iPhone manufacturing facility. That would remove any human-related challenges from the manufacturing process, but supply chain experts say that is not realistic due to frequently changing demands. Also, much of the manufacturing equipment is made in China.

Escalating pressure on Apple in recent weeks marks a change from the president’s first term, when Cook had leveraged a personal relationship with Trump to win tariff carveouts for Apple products. For investors on Wall Street, it underscores the uncertainty surrounding the impact of Trump’s trade policy on one of the world’s most valuable companies.

“It’s a red flag for me that Trump continues to single out Apple and seems to have something against them,” said Randy Hare, director of equity research at Huntington National Bank. “It doesn’t mean that Trump is going to do anything more, but you can’t predict what’s going to happen, and that makes me cautious.”

Cook was one of several Big Tech executives and billionaires who attempted to court Trump following his comeback election victory in November.

The Apple CEO had travelled to Trump’s Mar-a-Lago estate in Florida for a series of private meetings and dinners. He also sat behind the president at the inauguration in January along with Elon Musk, Alphabet Inc.’s Sundar Pichai, Meta Platforms Inc.’s Mark Zuckerberg and Amazon.com founder Jeff Bezos.

For Cook, it may be easier to absorb the higher cost of tariffs than rework supply chains that have taken years to build.

“In terms of profitability, it’s way better for Apple to take the hit of a 25 per cent tariff on iPhones sold in the US market than to move iPhone assembly lines back to US,” Ming-Chi Kuo, a TF International Securities analyst, wrote on X. BLOOMBERG