Location: Los Angeles

President Donald Trump has intensified pressure on Apple by proposing a 25% tariff on iPhones manufactured outside the United States. This potential policy change could lead to a considerable increase in retail prices, possibly inflating the average cost of an iPhone from around $1,000 to upwards of $3,500.

Potential Price Impact of U.S.-Made iPhones

Industry experts, including Dan Ives from Wedbush Securities, anticipate that producing iPhones domestically would elevate costs significantly. He estimates that the retail price could range from $2,000 to $3,500 due to increased labor and infrastructure expenses as well as the intricate nature of Apple’s supply chain.

“For U.S. consumers, the reality of a $1,000 iPhone being one of the best-made consumer products on the planet would disappear,” stated Ives.

Challenges Faced by Apple in U.S. Manufacturing

Tim Cook, Apple’s CEO, has indicated that transitioning production to the United States is not a straightforward task and could require years and an investment of billions. He remarked on the availability of skilled labor in China, noting:

“You could fill multiple football fields,” whereas in the U.S., “you could barely fill a room.”

Despite Apple’s commitment to invest $500 billion in the U.S. by 2028, this funding does not currently earmark iPhone manufacturing.

Future of iPhone Pricing

Analysts expect that Apple may increase iPhone prices this coming fall, even without the potential implementation of tariffs. Current inflation and declining service revenue are contributing factors. Should tariffs be enacted, a price increase could happen even sooner, incentivizing consumers to upgrade their devices ahead of rising costs.

Apple’s services division, which generated $96 billion in revenue last year, has provided some financial relief amidst rising production and operational costs. However, a recent court ruling may impact these profits, further complicating future pricing strategies.