$3500 for iPhone - Analysts warn of US tariff impact on Apple
Illustrative photo: "American" iPhones could rise sharply in price (Getty Images)
New tariffs introduced by the administration of President Donald Trump could radically change the market, and an iPhone produced in the US could cost three times more, according to CNN.
According to Dan Ives, the global leader of technology research at financial firm Wedbush Securities, the price of an Apple iPhone could soar to approximately $3500 if it is produced in the US.
He explained to Western journalists that iPhones made in the US could cost more than three times their current price of about $1000. This is due to the need to replicate the highly complex manufacturing ecosystem that currently exists in Asia.
“You build that (supply chain) in the US with a fab in West Virginia and New Jersey. They’ll be $3,500 iPhones,” he said, referring to fabrication plants, or high-tech manufacturing facilities where computer chips that power electronic devices are normally made.
Ives added that even moving just 10% of the supply chain to the US would cost Apple about $30 billion and take three years.
Apple's move to Asia
The manufacturing and assembly of smartphone parts moved to Asia decades ago, as American companies primarily focused on software development and product design, which brought much higher profits.
This move helped make Apple one of the most valuable companies in the world and solidified its position as a dominant smartphone manufacturer.
Tariff concerns impact Apple's stock
Since Trump’s inauguration in January, Apple’s stock has dropped about 25% due to concerns about the impact of tariffs on the company’s complex supply chain, which is heavily dependent on China and Taiwan. About 90% of iPhones are assembled in China.
“That’s why I think you see what’s happened to the stock, because no company is more caught up in this tariff front and center in this category five storm than Cupertino and Apple,” he said.
'Economic Armageddon' and analyst predictions
The expert added, “It’s an economic Armageddon, but especially for the tech industry.”
It’s also noted that the chips that power iPhones are mostly manufactured in Taiwan, while screen panels are supplied by South Korean companies. Some other components are made in China, and the final assembly mostly takes place in the country.
In February, Apple announced it would invest $500 billion in the U.S. over the next four years to expand production outside of China and avoid Trump’s tariffs on the country.
Technical analysts agree that iPhone prices are likely to rise, even if supply chains stay in place. According to an analytical note cited by Reuters, New York-based investment bank Rosenblatt Securities stated that iPhones could be 43% more expensive if Apple passes the higher tariff costs onto consumers.
Apple’s attempts to relocate production
Previously, Apple had tried to diversify its manufacturing bases from China to India and Brazil and might move the production of key components to countries that face lower tariff barriers to reduce the cost of phones. India has a 26% tariff, and Brazil has a 10% tariff.
Although Trump’s tariffs on Brazil are the lowest among key iPhone production hubs, it is likely not enough to fill the gap left by China, said Shah.
Other impact of tariffs
It was recently reported by Bloomberg that the US might run out of toilet paper due to Trump’s tariffs.
Western media also recently reported that due to the tariff “war” with China, the US might run out of Christmas trees and decorations by Christmas.
Additionally, it was reported that Americans may be left without new Jaguar cars due to Trump’s tariffs.
