As tariffs and labour costs bite, iPhones made in the US could cost 90% more, warns Bank of America. Apple eyes India to dodge trade war shocks.
Producing iPhones in the US could lead to a 90 per cent rise in manufacturing costs, according to analysts at Bank of America (BofA). In a note issued on Wednesday, BofA’s Wamsi Mohan said higher labour costs alone would increase production costs by 25 per cent.
While Apple could use American labour for assembly, many iPhone components are still made in China. These would need to be imported into the US. The analysts warned that if reciprocal tariffs are applied, overall costs could nearly double.
This estimate comes amid renewed trade tensions between the US and China. President Trump’s administration has ramped up tariffs on Chinese goods to 125 per cent, while China has responded with 84 per cent duties on US products.
Fears over rising prices led to a surge in iPhone purchases last weekend. According to a report by Taipei Times, Apple even chartered flights to ship around 1.5 million devices from India to the US ahead of the tariffs.
Relocating final assembly to the US would only be feasible if Apple received tariff exemptions on imported components, Mohan noted. However, such waivers appear unlikely.
Mohan believes Apple is unlikely to shift manufacturing to the US until the tariff situation becomes clearer. Instead, the tech company is expected to continue spreading its supply chain across other countries, especially India.
India is playing an increasingly important role in Apple’s production strategy. Taiwanese firm Foxconn and India’s Tata Electronics, two of Apple’s major suppliers, currently run three factories in the country. Reuters have earlier reported that two more are under construction.
As geopolitical tensions persist, Apple appears to be reducing its dependence on China, focusing on a more diversified and resilient global supply chain.
