President Donald Trump announced on 23 May that Apple will face a tariff of 25% or more for iPhones manufactured outside the United States. The president made the threat in a post on Truth Social, targeting the tech giant’s overseas production.
“I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” Trump wrote. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the US.”
Apple shares dropped 3% on 23 May following the announcement. The company’s stock has fallen more than 20% since Trump took office in January with his protectionist agenda.
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Trump initially targeted only Apple but later expanded the threat to include all smartphone manufacturers. “It would be also Samsung and anybody that makes that product, otherwise it wouldn’t be fair,” Trump told reporters in Washington. The new tariffs would take effect by the end of June.
The president referenced previous discussions with Apple CEO Tim Cook, claiming he had “an understanding” that Cook would not shift production to India. “I had an understanding with Tim that he wouldn’t be doing this. He said he’s going to India to build plants. I said that’s okay to go to India, but you’re not going to sell into here without tariffs,” Trump said.
Trump’s 23 May comments echoed statements from a Qatar trip on 15 May. “I had a little problem with Tim Cook,” Trump said during that visit. He recounted telling Apple’s CEO: “We’re not interested in you building in India… we want you to build here and they’re going to be upping their production in the United States.”
Manufacturing Reality and Industry Response
Lest you’re not aware, Apple’s flagship iPhone is produced primarily in China, though the company has been shifting some manufacturing to India due to friendlier trade relations with the US.
According to Wedbush Securities estimates, about 90% of Apple’s iPhone production and assembly remains based in China despite some production shifts.
Wall Street analysts estimate that moving iPhone production to the US would raise smartphone prices by at least 25%. Wedbush analyst Dan Ives put the estimated cost of a US-made iPhone at $3,500 (wait, WHAT?), compared to the current iPhone 16 Pro retail price of about $1,000.
Ives called reshoring iPhone production to the United States “a fairy tale that is not feasible” in a research note. Analysts widely agree that shifting iPhone manufacturing to the US is unrealistic and would require a fundamental overhaul of Apple’s business model.
Foxconn, one of Apple’s main iPhone assembly partners, is spending $1.5 billion on expanding its India facilities, according to a Financial Times report on 22 May.
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Treasury Secretary Scott Bessent said in a Fox News interview on 23 May that the Apple situation could be part of the Trump administration’s push to bring “precision manufacturing” back to the US. “A large part of Apple’s components are in semiconductors. So we would like to have Apple help us make the semiconductor supply chain more secure,” Bessent said.
Cook gave $1 million to Trump’s inauguration fund and attended the inauguration in January. Apple has announced a $500 billion spend on US development, including AI server production in Houston.
The company expects about $900 million in additional costs for tariffs in the current quarter, according to its 1 May earnings report. Cook said on the company’s earnings call that the tariff outlook was “very difficult to predict” past June.
Cook warned last month about the uncertain impact of threatened US tariffs on Chinese products, which at one point were hiked to 145%. Unlike during Trump’s first term, when Apple received exceptions from China-focused trade measures, the company has become a regular presidential target this time around.
Hargreaves Lansdown analyst Susannah Streeter said iPhone prices will rise if the threats become concrete trade policy. “While die-hard fans will still be prepared to pay big bucks for Apple’s kit, it’ll be much harder for the middle-class masses who are already dealing with price hikes on other goods, from Nike trainers to toys sold in Walmart,” Streeter said.
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Apple is also seeing weak demand in China. On 23 May, the company increased trade-in incentives for iPhones in China.
Trump followed his Apple post with another calling for a 50% tariff on products from the European Union. The posts signal increasing trade tensions after the US had temporarily lowered many levies, including in an agreement with China.
The US and China agreed last week to suspend sweeping tariffs on each other’s goods for 90 days, marking a temporary de-escalation in the trade war.
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