On Friday, US President Donald Trump threatened Apple with a 25% tariff if the company doesn’t start making iPhones in the United States. This caused Apple’s stock price to drop sharply.
Apple in the crosshairs of Trump’s trade policies
Apple has become a key target for Trump, who criticises companies that manufacture their products overseas. It is unusual for him to single out a company for tariffs like this.
Apple designs its products in the US, but most iPhones are assembled in China. China is at the centre of a trade war with the United States.
Apple has been moving some of its production to India. However, Trump said this wouldn’t solve the problem.
Trump’s direct message to Tim cook
On his social media platform, Truth Social, Trump said he had already told Apple CEO Tim Cook that he expected iPhones sold in the US to be made in America. He added, “If that’s not the case, Apple must pay a tariff of at least 25% to the US.”
Trump repeated these comments during a trip to Qatar last week. He told Cook, “We’re not interested in you building in India… we want you to build here.”
The challenges of moving iPhones production
Most analysts believe shifting iPhone production to the US is unrealistic. It would require a major change to Apple’s business model and could take years to implement.
Despite efforts to diversify, Apple still assembles 90% of its iPhones in China, according to Wedbush Securities.
Dan Ives, an analyst at Wedbush, called the idea of reshoring production a “fairy tale” that isn’t feasible.
Since Trump took office, Apple’s stock has fallen by over 20%. On Friday, it was down nearly 3%.
The impact of US tariffs on apple and consumers
During Trump’s first term, Apple received exceptions to some trade policies. This time, however, the company has been a regular target.
Tim Cook recently expressed concern about US tariffs on Chinese products. At one point, tariffs reached 145%. Although some high-end tech products, like smartphones, received temporary exemptions, Cook warned that Apple expects tariffs to cost $900 million this quarter.
Analyst Susannah Streeter from Hargreaves Lansdown said, “Prices for handsets are likely to rise if these tariff threats become reality.”
“Dedicated Apple fans may still pay a premium, but middle-class consumers will find it harder. They’re already facing price hikes on many products, from trainers to toys,” she added.
Last week, the US and China agreed to reduce tariffs for 90 days. This temporary break marked a de-escalation in the trade war.
