The reintroduction of US tariffs on Chinese imports under President Donald Trump is poised to significantly increase the cost of manufacturing Apple’s flagship device, the iPhone, according to analysts.
With the iPhone 16 Pro serving as a case study, experts suggest that the implications for pricing and production could be substantial, further complicating efforts to shift technology manufacturing back to the United States.
Apple’s global supply chain, which spans Asia, North America and beyond, currently relies heavily on assembly operations in China. Although the company sources components from various countries, final production is largely concentrated in Chinese facilities, where the electronics assembly infrastructure has matured over decades.
At present, the hardware cost to Apple of the 256GB iPhone 16 Pro is approximately $550, based on a component-by-component analysis by TechInsights. This figure includes key parts such as the A18 Pro processor sourced from Taiwan, memory chips from the United States, display panels from South Korea, and storage modules from Japan. Assembly and testing raise the total manufacturing cost to around $580 per unit.
However, with a newly imposed 54% tariff on goods from China, the overall cost to Apple could increase to approximately $850 per phone. These tariffs, aimed at reducing US dependency on Chinese manufacturing and encouraging domestic production, risk compressing Apple’s profit margins unless retail prices are adjusted accordingly. The current consumer price for the 256GB model in the US is approximately $1,100.
Apple has declined to comment on the specific impact of the tariffs on its pricing strategy or manufacturing plans.
Efforts to shift assembly operations from China to the United States are fraught with complexity and cost. Barton Crockett, a senior research analyst at Rosenblatt Securities, described such a move as a “massive, mammoth undertaking” that would require years to implement. He noted that the cost of assembly labour alone could rise tenfold in the US, from roughly $30 per phone in China to as much as $300.
Furthermore, if Apple were to produce all components domestically, the total cost could increase exponentially. According to Crockett, this scenario remains unrealistic given the current absence of a viable domestic supply chain for many of the high-precision components used in smartphones.
The concept of an American-made iPhone remains attractive to some policymakers, particularly those advocating for reduced reliance on foreign suppliers and increased domestic employment. However, analysts caution that the economic and logistical barriers remain formidable. A full-scale shift of high-end electronics manufacturing to the US would involve not only the construction of new production facilities but also the establishment of a skilled workforce and new supplier networks.
Wayne Lam of TechInsights emphasised the complexity of Apple’s existing supply chain, noting that even components such as batteries, which are often sourced from China, would still attract tariffs if imported into a US-based assembly facility. Tariff relief, therefore, would only apply to a limited number of production stages, and not to the vast majority of inputs required for each device.
The longer-term impact on consumers remains uncertain. Apple is unlikely to absorb the cost increases without raising retail prices, particularly in light of pressures to maintain investor confidence and sustain high profit margins. In previous years, the company has opted to adjust pricing across different markets depending on currency fluctuations, local taxes and supply chain dynamics.
There are also implications for the broader smartphone market. Should Apple increase its prices significantly, rival manufacturers may follow suit or attempt to gain market share by undercutting Apple’s pricing while keeping production offshore. Alternatively, firms may accelerate efforts to diversify their manufacturing base to countries such as India or Vietnam, where costs remain lower than in the US, and where governments have shown a willingness to offer incentives for foreign investment.
While the Trump administration’s goal of repatriating technology manufacturing remains central to its economic platform, the practical realities of doing so for complex consumer electronics appear to undermine the feasibility of such initiatives. For now, industry analysts suggest that consumers may face higher prices, and Apple may be forced to further refine its global strategy to mitigate the impact of evolving trade policies.
In the meantime, experts advise consumers to hold on to existing devices longer, as pricing uncertainty persists and the prospect of significantly more expensive models looms.
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