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Iphone United States Apple

25% iPhone Tariff Insufficient To Drive US Production Shift, Morgan Stanley Says 141

Posted by msmash from the closer-look dept.
President Trump's threat of a 25% tariff on smartphone imports including iPhones would not provide enough economic incentive for Apple to relocate US-bound iPhone production to domestic facilities, according to a new Morgan Stanley note viewed by Slashdot. The tariff threat, announced Friday via social media, appeared to target Apple's recent shift of iPhone production from China to India through its contract manufacturing partners.

Morgan Stanley analysts estimate that establishing US iPhone production would require a minimum of two years and several billion dollars to build multiple greenfield assembly facilities, with a trained workforce exceeding 100,000 workers during peak seasons. More significantly, the firm calculates that a US-produced iPhone would cost 35% more than current China or India production, primarily due to higher labor costs and the need to import 25% of iPhone components from China under existing 30% tariffs. By contrast, Apple could offset a 25% import tariff by raising global iPhone prices just 4-6%, making domestic production economically unviable.

25% iPhone Tariff Insufficient To Drive US Production Shift, Morgan Stanley Says More | Reply

25% iPhone Tariff Insufficient To Drive US Production Shift, Morgan Stanley Says

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  • Individual tariffs (Score:5, Funny)

    by ArchieBunker ( 132337 ) on Tuesday May 27, 2025 @08:10AM (#65406967)

    So we're doing tariffs on a corporate basis now? The party of small government strikes again.

    • Re: (Score:3, Insightful)

      by Anonymous Coward
      Just a Trump shakedown
      Tim Apple will buy some Trump memecoins and the tariffs will go away for a few months.
      Rinse. repeat.

      • Re: (Score:3, Insightful)

        by bkmoore ( 1910118 )

        Just a Trump shakedown........Rinse. repeat.

        Yes. Trump will be holding a gun to the head of the American Economy for the next four years, playing MAGA Roulette. Cycle: make threats, take bribes, time the market and make quick returns, then delay such threats...

    • Not to mention that during the pandemic, Republicans claimed to hate being advised what to do by what they called an unaccountable central authority, but the tariffs are just that, if not actually much, much worse.

      Thereâ(TM)s no way to onshore manufacturing and production without our legislators â" who are actually accountable to us, an important distinction. Trump has said that itâ(TM)ll take two years to onshore. Thereâ(TM)s no way! Itâ(TM)d take five to ten years to make it hap

  • Can they find a way to assemble to phones automatically? If so, then they can do it in the US.

    Design it to need fewer screws.

    • Fewer screws either means harder to open (and therefore harder to perform the battery replacements they sell to customers when their underspecified batteries fail to provide sufficient current to run the device) or it means bigger and bulkier, which is the opposite of what they want to accomplish, so that's a non-starter. They need the screws to be competitive.

      Tiny screws can only be accurately installed by humans, no machine can do it gracefully. So they need humans to install screws.

      Larger equipment could

      • Fewer screws either means harder to open

        Yeah, because unscrewing 15 screws is easier than unscrewing 5 screws. /s
        Turn your brain on.

        • unscrewing 15 screws is easier than unscrewing 5 screws

          Thanks for proving you don't even understand the argument.

          Hint: The device has to be held securely closed somehow whether you use screws or not.

          Turn your brain on.

          At first I thought you were being clever. Now I see that's not true.

          Why do you want everyone to know you type without thinking?

        • Let me guess, you’ve never encountered the wonders of a thing called glue?

          • Let me guess, you’ve never encountered the wonders of a thing called glue?

            Glue is great for things you don't want to come apart. That may or may not be desirable in a phone.

        • Yeah, because unscrewing 15 screws is easier than unscrewing 5 screws. /s Turn your brain on.

          What he means and what you missed is fewer screws generally means other things like more glue as something has to replace that functionality. You don't think manufacturers want fewer screws? Fewer screws means faster production and less cost.

      • All smartphones should go back to having a back that can be removed by the consumer and the battery be replaced, I dont care if my phone is a sixteenth of an inch thicker

        • All smartphones should go back to having a back that can be removed by the consumer and the battery be replaced, I dont care if my phone is a sixteenth of an inch thicker

          I agree with you 100%. I want the same thing you do. Unfortunately, this is not what the majority of consumers want, as illustrated by what they pay money for: shinier. Even my $200 Moto phone has a glass back... which I cannot see because I put it in a big beefy case which actually protects it.

        • The EU has already made this a requirement by 2027.

        • All smartphones should go back to having a back that can be removed by the consumer and the battery be replaced, I dont care if my phone is a sixteenth of an inch thicker

          Are you okay with your phone being less water resistant then? How about less battery as the phone must now be designed to be opened and internal volume sacrificed?

          • Are you okay with your phone being less water resistant then?

            Most phones are only notionally water resistant now. They straight lie about the rating. It's only when not powered on, only if you don't try to use it while it's wet, etc.

            How about less battery as the phone must now be designed to be opened and internal volume sacrificed?

            GP: "I dont care if my phone is a sixteenth of an inch thicker"
            You: *ignores prior comment but replies to it anyway*

      • Gosh ...
        It had fewer screws - yes.
        But same amount of holes for the screws.
        So where you found a screw - or not - was pretty random ;)

    • Re: (Score:2)

      by shilly ( 142940 )

      You can only do viable final assembly in a geography where you can be assured of JIT delivery of the components you’re assembling, and that means an integrated supply chain stretching back many steps. Maybe not quite to raw materials, but not far off when you’re dealing with precision manufacturing of very high volumes at low cost. None of that is feasible for phones in the US

      • The Apple supply chain stretches back all over the world. Some of the parts are built in America, others in Japan, others in Germany.

        Think like an engineer. Instead of saying we can't, say, "How much would it cost?" "How can we make it cheaper?" Those are the relevant questions.

        • Thinking like an engineer isn't going to solve the problem that every one of those countries you just named has double-digit tariffs applied.

          You have solved nothing.

    • Re: (Score:2)

      by Zocalo ( 252965 )
      Too much oversimplication here. Even if they're doing all the assembly in the US, Apple (along with everyone else) still need to import components they don't / can't manufacture themselves (e.g. the screens in iPhones), and unless the vendors of those components also move manufacturing to the US, they're probably going to be subject to tariffs. It won't be a flat 25% (or whatever it is todayt) tariffs on the whole street cost of the phone, but it will add up, and some - or all - of those component tariff

      • Make your phones 4-6% less financially appealing to maybe ~6 billion potential buyers[*] instead of 25% less appealing to 255m potential US buyers

        The problem there is that iPhones are already unappealing for most of the world given they cost much more than Android ones. Globally the iPhone is only popular among rich folk, as a status symbol of sorts, and to a handful of enthusiasts willing to spend what they don't have to get a years-old model. When it comes to mass popularity, that happens in the US, and only in the US, where it sells about 125k units per typical uneventful day, and millions of units on launch days.

        All of which means that making it

        • You are assuming that the Apple buyers would not pay that 25% extra. My gut feeling is that they will gladly pay 25% more just to show that they can. There's a whole category of people that will buy a more expensive and objectively crappier car to show off. Who will be impacted is other smartphone manufacturers if the tariff applies to them as well, and the low income people that buys them. Import tariffs are almost without exception a tax on the poor.

          • Import tariffs are almost without exception a tax on the poor.

            Indeed. As well as inflation, whether resulting from tariffs or not. Both have as their core purpose transferring wealth from the poor to the rich, the latter being even more insidious as it's rarely perceived as such.

          • It also assumes Apple doesn't eat some of the added cost. Unlike all their competitors, Apple can afford to pay those tariffs without increasing prices. And that might be a good move given the chaos in the US isn't likely to last very long.

        • The problem there is that iPhones are already unappealing for most of the world given they cost much more than Android ones.

          2024 iPhone Unit Sales by Region (millions) [businessofapps.com]:

          • North America: 100.4
          • Europe: 58.8
          • China: 38.5
          • Japan: 14.5
          • Rest of Asia: 19.9

          Define "unappealing". Yes, iPhone sales are less than Android sales; however, to say it is "unappealing" is a very black and white argument especially since Apple is generally #2 behind Samsung in terms of sales.

          When it comes to mass popularity, that happens in the US, and only in the US, where it sells about 125k units per typical uneventful day, and millions of units on launch days.

          Europe: 58.8 million units /365 days= 161,095 units per day.

          For the record, Trump has stated that what he really, REALLY wants with the tariffs is for factories to move to the US, period. So it doesn't matter what Apple does or argues

          And you didn't bother to read the summary much less the article. It would take years and billions of dollars for tha

          • Define "unappealing".

            I was being hyperbolic. Still, notice that the US alone is over 43% of the entire Apple market for iPhones, larger than Europe and China combined. That's a very huge market to annoy at large, so annoying it a little and the rest a little would likely be more effective.

            It would take years and billions of dollars for that to be remotely possible.

            I know that. I'm not arguing Trump's ideas make sense, I'm pointing out what they are. And he doesn't care for the details, only for what he wants. Feasibility is optional.

            • I was being hyperbolic. Still, notice that the US alone is over 43% of the entire Apple market for iPhones

              I think you will find that there are other countries in "North America".

              • I think you will find that there are other countries in "North America

                Comparatively speaking...they really don't matter, even if you combined them all....

        • Re: (Score:2)

          by Zocalo ( 252965 )
          Perhaps, but my point was more that the models are overly simplistic and Apple (and everyone else) will have to do their own calculations to figure out the best approach for their specific products. In nearly every case, due to the supply chain logistics and costs/timescales involved to change it, that is going to be "pay some (or all) of the component / assembled device tariffs and pass on the costs to the consumer". In the short term - until they can at least spin up final assembly in the US - they have

          • I agree with your points. This however:

            stick the whole 25% (or whatever) directly on the price for US customers and add that mooted Amazon line item - "Tariffs - 25%: $$$".

            Would be political suicide.

            For a while Trump has been writting EOs targetting specific companies and service provider for particular forms of pain. He has already signalled to Amazon that highlighting tariffs in prices to end consumer would be met with punishments, so Amazon backtracked and only shows that line in very specific circumstances for wholesale sales.

            Were Apple to try something similar the punishment would be swift and immediate, think 100% or even 200% tari

    • Sure, because we all know that all the electronic bits that go into an iPhone are already made in the US, right?

      And we know that the chassis parts are also made in the US?

      And we know the tools that do the forming and component manufacturing are made in the US?

      And the fictional tooling that would do the assembly is made in the US?

      If the answer to any of those is "no" then you aren't getting anywhere by assembling in the US, because you are still paying tariffs on all of those things.

    • You just could suspend it in hot glue, wait until everything has assembled together, and pull it out? Wipe the screen and you are done.

    • Re: (Score:2)

      by tsqr ( 808554 )

      Design it to need fewer screws.

      You think an iPhone has a lot of screws? Try removing the main board from a late-model Macbook Pro.

  • 35% seems like an underestimate (Score:5, Insightful)

    by shilly ( 142940 ) on Tuesday May 27, 2025 @08:15AM (#65406985)

    I’m sure the analyst teams have been up late several nights running the numbers and kicking the tyres on their 35% estimate of the price increase needed to make iPhones in the US vs China, but it seems like a wild underestimate to me, mainly because you don’t have the integrated supply chains and workforce skills in the US, and neither of those problems is readily addressable by Apple alone.

    But in any event, none of this ought to distract from the most important point: the president is seeking to supplant the decisions of the CEO of one particular business, and most media reporting is treating this as just another part of the tariff story, instead of highlighting that this is another major ratchet in Trump’s arrogation of unchecked whimsical power.

    • Apple spent $276 billion upskilling Chinese labor. They have certainly demonstrated that they are capable of addressing worker skill shortage alone -- they just do not want to do this where people cost more ... and they probably can't build factories in the U.S. with dormitories that look an awful lot like prison.

    • I’m sure the analyst teams have been up late several nights running the numbers and kicking the tyres on their 35% estimate of the price increase needed to make iPhones in the US vs China, but it seems like a wild underestimate to me, mainly because you don’t have the integrated supply chains and workforce skills in the US, and neither of those problems is readily addressable by Apple alone.

      I'm no expert so I could be talking out of my ass here. But aside from building supply chains and educating a workforce - because of course they can't use immigrant labour - I strongly doubt that the two-year figure for building assembly plants is anywhere near realistic. I'd be surprised if they could get it done in double that time.

      At this point I'm wondering if the Trump regime plans to take its cue from the Saudis - bring in custom-purpose, no-rights immigrant construction workers whose location, moveme

      • I'm no expert so I could be talking out of my ass here. But aside from building supply chains and educating a workforce - because of course they can't use immigrant labour -

        What's all the complaining about 'tech' and training a workforce ??

        I can't imagine that assembling an iPhone is akin to fucking rocket surgery...?!?!

    • Re: (Score:2)

      by Sloppy ( 14984 )

      the president is seeking to supplant the decisions of the CEO of one particular business

      It's time you right-wing Demonrats admit that Comrade Trump and his economic planning committee know better about what we need, than running dog capitalists like Tim Apple.

      We can't let private industry make decisions about their products. When America unanimously agreed to vote Trump in an overwhelming landslide, we forsook all that Adam Smith nonsense, because Comrade Trump is ready to fight as Marx's champion.

      Cower, yo

      • Re: (Score:2)

        by shilly ( 142940 )

        I know what you’re trying to do, but the parody is pointing in the wrong direction. This is a *fascist* move, not a *communist* move. The differences are very consequential.

  • The plan (Score:5, Insightful)

    by RobinH ( 124750 ) on Tuesday May 27, 2025 @08:18AM (#65406995) Homepage
    The plan is this: cause a crisis, let everyone freak out, extract a (tiny) concession, declare the crisis resolved, declare yourself a hero, rinse and repeat. Meanwhile nobody with any money to invest will dare invest it in the US.

    • Re: (Score:2)

      by Tablizer ( 95088 )

      Don's Making Europe Great Again, being to investors it looks more stable than Orangeland.

    • Re:The plan (Score:5, Interesting)

      by hdyoung ( 5182939 ) on Tuesday May 27, 2025 @09:09AM (#65407125)
      Actually, the analysis I've read is that businesses and wall street concluded long ago that Trump is 100% hot air, made-for-social-media. Your description of his strategy is spot on, and the smart money has already figured it out. In reality, tariffs are up like 5-10 percent, and businesses are quietly passing every single penny of the extra cost on to the consumers. Business and investment are gonna mostly happen as usual.

      On the other hand, main street is getting lightly hammered. Prices are up 5-10% because of tariffs, which is enough to downshift the economy a bit and make life a tad less comfortable. 33% of the average Joes watch Fox, and 33% watch NBC, and both of those outlets portray the world as being on fire from pole-to-pole, because that's what drives viewership and sells ads. So, most consumers and retails investors basically bipolar nowadays, which causes all sorts of whiplash.

      But, life largely goes on. Trump will finish out his 4 years. Looking back, we will realize that he accomplished and changed surprisingly little.

      • Re: (Score:3)

        by HiThere ( 15173 )

        I feel you are incredibly optimistic, but I hope you're right.

      • And he's actually expanding debt faster than Biden was with the same spending levels because the bond markets are giving him feedback he's not listening to.

        The Treasury debt auctions are paying more interest for the same amount of money because bond yields are up behind his bullshit. But somehow that's going to reduce the debt?

        • Oh, we're barrelling towards a debt crisis. 100% for sure. Nobody can predict if it'll land in 5 years, 15 years or 50 years. Anybody making a precise prediction is basically throwing darts at the wall

          But every competent finance person agrees that the US debt trajectory is unsustainable, and that absolutely nobody in the government has any incentive to be financially responsible. Not democrats. Not republicans. Anyone who tries to be responsible gets booted out of office by the voters, because fiscal res

      • Business and investment are gonna mostly happen as usual.

        Except they're not.

        On the business side, every survey of business leaders as well as every other indicator of capital investment shows that they're hunkering down: deferring or even cancelling any plans to expand, freezing hiring (if not actively working to reduce staff), etc. Good businesspeople can deal with almost any economic and regulatory climate you throw at them, but the one thing they need is predictability. Business is all about planning, and you can't make plans in the fact of chaos.

        On the

    • Can't agree more. That's my impression from day one. I'm curious to see the numbers for things like trade, unemployment and crime at the end of his term. I bet any marginal difference will be touted as a HUGE win.

    • That implies things will eventually go back to some semblance of normality. That's not going to happen.

      The plan here is to shift trillions of dollars of tax burden from the 1% to you and me. It's a national sales tax.

      This is what's in the "big beautiful bill". In order to get the 7 trillion in tax cuts through Trump (and let's face it musk) wanted they needed to offset those costs somehow so they didn't completely freak out the bond market and crashed the entire global economic system.

      They have

    • Re: (Score:2)

      by AmiMoJo ( 196126 )

      I'm just surprised that Tim Apple hasn't sorted this out yet. He can legally and openly bribe Trump, and even without that advantage Putin managed to play the dear leader like a fiddle.

      Maybe he is waiting to see if Trump actually does it, or if this is just one of those things he forgets about.

      • My guess is that they're waiting until it actually happens to do something about it. And if it does happen, that's when they drop a massive lawsuit in federal court in San Francisco, where they get a TRO / injunction against it. And that will be appealed by the government, which will go to the 9th district appellate court - good luck with that.

        Apple is holding all the cards here - they have the most friendly court and appellate court possible for this fight, and a public that doesn't want to see a $1000 p

    • I'm afraid that "extract a (tiny) concession" is overstating things.

      So far in his "awesome deals" he's scored with the UK and China, all we've gotten are higher prices than we had before.

      Art of the deal!

  • WTF (Score:5, Insightful)

    by Anonymous Coward on Tuesday May 27, 2025 @08:27AM (#65407015)

    By contrast, Apple could offset a 25% import tariff by raising global iPhone prices just 4-6%

    WTF?
    Why should the rest of the world pay for Trumps incompetence?
    Americans voted for him, let them pay for their mistake.

    • How is this insightful? If they don't like it don't buy a iphone.

    • Yes, because an American company is going to hammer the American market where they have the largest market share and highest customer satisfaction.

      Don't quit your day job and go into business management, because you're not good at it.

    • Re: (Score:2)

      by dstwins ( 167742 )
      Apple has historically kept their products the same price across countries/regions so there is little incentive to go region chasing.. (you are chasing availability or features rather than price).. which means the sales numbers per region aren't skewed by "vacation shoppers".. (in the US its a little different since there are statewide shifts.. like buying in no sales tax states and moving it to a sales tax state)..

      So because of this, any fluctuation is leveled out by the world as a whole.. rather than reg

    • Why should the rest of the world pay for Trumps incompetence?

      Because Apple realises that across the board small price increases are easier for consumers to swallow then the just passing all costs onto a subset of consumers. We're already seeing that. Xbox prices went up 100EUR in Europe as Microsoft decided to just raise them globally partially to offset tariffs, partially because they are greedy fucks who want to make all the money.

      The reality is the rest of the world already pays a price set arbitrarily by an American company. $999USD = 885EUR, but the iPhone 16 P

  • They'll just wait him out. (Score:3)

    by SlashDotCanSuckMy777 ( 6182618 ) on Tuesday May 27, 2025 @08:29AM (#65407021)

    He's only got 3.5 years left, and lots of that will be bogged down in other stuff.

    • Re: (Score:3)

      by Dan667 ( 564390 )
      it is now 1 1/2 years to mid terms. I am hoping it will be a bloodbath for the GOP getting kicked out of seats they have held a long time. If the house flips then it will be gridlock and the final 2 years will be less stupid.

      • it is now 1 1/2 years to mid terms. I am hoping it will be a bloodbath for the GOP getting kicked out of seats they have held a long time. If the house flips then it will be gridlock and the final 2 years will be less stupid.

        I dunno...seeing the talking points the Dems and talking heads are doing and the dearth of viable candidates....I don't see them sweeping anything at this time.

  • Local production (Score:4, Insightful)

    by Bert64 ( 520050 ) <bert@@@slashdot...firenzee...com> on Tuesday May 27, 2025 @09:28AM (#65407193) Homepage

    Other countries (eg Indonesia) also have a local production quota:
    https://techxplore.com/news/20... [techxplore.com]

    • Notice that:

      1) Indonesia government demanded "40% of smartphone components" being made there, but settled for accessories and AirTags.
      2) The investment (reportedly) was of only USD150 million, nothing near the billions that are being required in the US.
      3) Indonesian wages are about 1/6 of the US.
      4) We don't really know how many jobs they're creating, but I bet it's not that much.
      5) We have no way of knowing how much corruption went with this deal.

  • Not just percentage.. (Score:3)

    by Junta ( 36770 ) on Tuesday May 27, 2025 @09:28AM (#65407195)

    But also consistency... As it stands even if it might make sense, it probably won't make sense within 30 to 60 days. You do a bunch of work because the planned tariffs are 50% and then poof, the tariffs go away and you've just spent a bunch of money to mitigate a business impact that never materialized. If you are in a vaguely competitive environment, the competitor that just did nothing eats your lunch.

  • Global price increases? (Score:4, Insightful)

    by N1AK ( 864906 ) on Tuesday May 27, 2025 @09:39AM (#65407245) Homepage
    I'm interested in the analysts assumption that Apple could/would solve the issue by increasing prices equally globally. It might be true but without an explanation it seems like an odd assumption; if Apple could increase prices by 5% in Europe (for example) without seeing a notable decrease in sales then why wouldn't they already; they clearly don't mind having mega-profit margins. European consumers are likely to take poorly to the idea that their prices are being increased by Apple to discount phone sales in the US. Their sales outside the US have considerably lower tariffs and are thus more profitable so why compromise those to retain US sales with considerably lower margins?

    The truth is that no one is really planning on doing anything in response to Trump tariffs/threats of tariffs. The work involved is crazy expensive and based on experience the tariffs aren't even likely to happen or stick so you just need to sound like you are intending to do enough so that Trump feels he can claim it as a success then move onto creating chaos somewhere else then claiming credit when things calm down after he stops fucking things up again.
  • Companies threatened with tariffs unless they relocate will make pretend they're building a plant in the US until Trump leaves office or dies and then they'll shelve those plans. Apple will be no different.

  • Of note:

    A) The tariff is on all smartphones not manufactured in the US, not just Apple. Trump has named Apple as a point of mind, but the details indicate they are not being singled out.

    B) If in fact Apple were to just eat/raise prices worldwide rather than move manufacturing to the U.S. for any set of reasons, that would translate to ~$30B/year in tariff revenue for the U.S. (https://www.demandsage.com/iphone-user-statistics/)

    C) In case it's not clear, whether you like it or not, it is clear that this

  • If he thinks he is going to change the global economy to a domestic economy, either that or he is just a thief using all this as a way to steal money from everyone he can, I think Trump should be spending the rest of his life behind bars in a maximum security federal prison

  • Forget global cost spreads. They'll do a 50% price increase. 25% of which is used to pay the tariff and then the other 25% as PAC contributions that encourage alternative politicians to change the law.

  • It will never happen (Score:3)

    by battingly ( 5065477 ) on Tuesday May 27, 2025 @11:46AM (#65407681)

    The tariff could be 1000% and it still wouldn't make sense for Apple to take on the gargantuan task of moving production stateside, for the simple reason that it's likely the tariffs are just temporary. The chaotic way tariffs have gone up and down the past few weeks give very little confidence any tariff policy will be permanent, and even it was, there's a chance a new administration will be in office in 3 1/2 years, with a new policy.

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