Investors awoke on Friday preparing to go into a relaxed 3-day weekend for the Memorial Day holiday but quickly realized otherwise.
President Donald Trump reignited his turbulent trade war with shifting his focus to iPhone maker Apple and threatening a 25% tariff on the company to shift its production to the U.S.
Trump is pushing Apple to manufacture iPhones in the United States and has threatened to impose a 25% tariff on devices made overseas. His comments come amid rising tensions with Apple CEO Tim Cook over the company’s growing iPhone production in India.
On his trip to the Middle East last week, Trump met with Apple CEO Tim Cook and later said he didn’t want Apple building a manufacturing plant in India, according to the Times of India. That statement got stronger on Friday after the new $1.5 billion plant in India was reported by various news outlets.
“I had a little problem with Tim Cook,” Trump said last week, expressing frustration with Apple’s decision to expand its manufacturing footprint in India.
Trump took to Truth Social on Friday and said he “long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.”
Back in February, Apple announced that it was investing $500 billion in U.S. operations, including a server plant in Houston.
Apple confirmed earlier this month that it plans to source the majority of iPhones sold in the U.S. from India, a strategy that has sparked backlash from the former president. The company has been building its supply chain in India since 2017, and the region now has the capability to produce Apple’s latest devices.
Despite Trump’s threat, analysts say Apple is unlikely to shift production back to the U.S. due to the enormous costs and logistical hurdles involved. “In terms of profitability, it’s way better for Apple to take the hit of a 25% tariff than to move iPhone assembly lines back to the U.S.,” said Ming-Chi Kuo, a noted Apple supply chain analyst.
David Vogt, an analyst at UBS, said that although the tariffs are a “jarring headline,” their actual financial impact would be limited — reducing Apple’s annual earnings by just $0.51 per share compared to previous estimates.
Experts widely agree that manufacturing iPhones in the U.S. would be prohibitively expensive. CNBC previously reported that a U.S.-made iPhone could cost between $1,500 and $3,500 at retail due to higher labor and production costs. Beyond the financial strain, there are significant logistical challenges, including years-long timelines to build factories, source parts, and train staff.
“Apple producing iPhones in the U.S. is a fairy tale that is not feasible,” Wedbush analyst Dan Ives said in a note.
While the long-standing relationship between Trump and Cook appears to be fraying, analysts suggest Apple might still find ways to navigate the situation. The company could seek exemptions, negotiate with the administration, or challenge the tariffs in court.
Currently, most of Apple’s key products remain exempt from tariffs — including those imported from China — thanks to waivers issued by the Trump administration in April. However, it’s uncertain how these policies will evolve after June.
Wells Fargo analyst Aaron Rakers noted that Apple may offset potential tariff costs by raising U.S. iPhone prices by $100 to $300 per unit. He also speculated that the administration could target Indian imports specifically with new tariffs, although details remain unclear.
Apple’s manufacturing presence in India continues to grow. Foxconn, one of Apple’s main suppliers, is investing $1.5 billion in a new iPhone assembly plant in India, according to the Financial Times.
Apple doesn’t produce iPhones in the United States for several key economic, logistical, and supply chain reasons:
Manufacturing iPhones requires thousands of workers. Labor in countries like China and India is significantly cheaper than in the U.S. Estimates suggest that making iPhones in the U.S. would increase retail prices dramatically — possibly to $1,500–$3,500 per phone.
Apple also relies on a highly optimized and localized supply chain in Asia, especially China. Components like screens, chips, and batteries are mostly made within a few hours’ drive of Foxconn factories in China. The U.S. simply doesn’t have the same dense network of suppliers or manufacturing expertise for electronics at this scale.
China and India can additionally build or retool massive factories quickly, often in months, not years. U.S. permitting, construction timelines, and regulatory hurdles would significantly slow production ramp-up.
Owen Tedford, an analyst at Beacon Policy Advisors, says the Apple tariff threats could be tied to the levies expected out of the administration’s Section 232 investigations into certain sectors. “It would suggest that Trump is at least considering not giving the company an exemption from the duties,” Tedford said.
Apple has yet to comment on Trump’s statements.
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