25% iPhone Tariff Insufficient To Drive US Production Shift, Morgan Stanley Says
- Reference: 0177806747
- News link: https://apple.slashdot.org/story/25/05/27/127201/25-iphone-tariff-insufficient-to-drive-us-production-shift-morgan-stanley-says
- Source link:
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.
[1] https://apple.slashdot.org/story/25/05/23/1216240/apple-faces-25-tariff-threat-unless-iphone-manufacturing-moves-to-us
It really depends (Score:2)
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.
Re: (Score:1)
Make the iPhone one big silicon chip; Solved!
Re: It really depends (Score:2)
"since always" isn't true at all; Apple used to have an ultra-modern plant in Fremont, California where they manufactured computers in the late 1980s/early 1990s.
Alas, this feels like a different planet to today's eye; a sad testament to what's been lost.
[1]https://youtu.be/Dk306ZkNOuc?s... [youtu.be]
[1] https://youtu.be/Dk306ZkNOuc?si=YwiJj7PodW0w2ryv
Re: It really depends (Score:2)
It was lost because no one wanted to do the work at wages offered. Therefore you lost nothing of value. Have you lost compared to a world where corporations give a shit about their employees and wanted them to happy lives? Yes and also I have a unicorn to sell you!
Re: It really depends (Score:2)
Ultra-modern in 80s/90s means: useless in 2025.
Re: (Score:2)
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
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> Fewer screws either means harder to open
Yeah, because unscrewing 15 screws is easier than unscrewing 5 screws. /s
Turn your brain on.
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> 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?
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Let me guess, you’ve never encountered the wonders of a thing called glue?
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> 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.
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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
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> 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.
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The EU has already made this a requirement by 2027.
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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 ;)
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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
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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.
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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.
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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
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> 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
Re: (Score:2)
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.
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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.
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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.
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> 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)
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.
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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.
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Got a source for that figure?
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- [1]https://www.nytimes.com/2025/0... [nytimes.com]
- [2]https://mobiledevmemo.com/book... [mobiledevmemo.com]
- [3]https://www.hinrichfoundation.... [hinrichfoundation.com]
- [4]https://www.nytimes.com/2025/0... [nytimes.com]
- [5]https://www.forbes.com/sites/s... [forbes.com]
- [6]https://patrick-mcgee.com/ [patrick-mcgee.com]
[1] https://www.nytimes.com/2025/05/15/books/review/apple-in-china-patrick-mcgee.html
[2] https://mobiledevmemo.com/book-review-apple-in-china-by-patrick-mcgee/
[3] https://www.hinrichfoundation.com/research/article/fdi/apple-and-china-untying-the-knot/
[4] https://www.nytimes.com/2025/05/01/technology/apple-china-tariffs.html
[5] https://www.forbes.com/sites/stevebanker/2023/01/19/apples-china-problem/
[6] https://patrick-mcgee.com/
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The USA already has the biggest prison population in the world, just put the factory's next to the prisons, build a fenced corridor between the two and there you have it
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One important aspect of prison is to try to keep sharp objects and phones away from the prisoners.
I don't think your suggestion is compatible with those goals.
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Depends on the prisoner, there are plenty that just accepted their fate and dont want any more trouble and would do it for the learning experience and make a little money and relieve boredom, the troublemakers are known and they are kept back and only allowed to work inside the prison like janitorial and laundry, I dont think the troublemakers are allowed are even allowed to work in the kitchen
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Unfortunately most of the slave labour in the US is already occupied: [1]https://en.wikipedia.org/wiki/... [wikipedia.org]
[1] https://en.wikipedia.org/wiki/Penal_labor_in_the_United_States
Re: (Score:2)
Also: no business in their right mind is going to commit the level of resources necessary for this shift, based on a mercurial orange asshat who changes his tariff policy more often than he changes his underwear.
No long-term planning can be done in this environment, with the sole exception of "wait and see."
Cook would look like the biggest fucking idiot if he dumped $100B into trying to onshore manufacturing just to see the tariff disappear in two weeks.
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> No long-term planning can be done in this environment
Sums it up perfectly.
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> 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
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> 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
The plan (Score:5, Insightful)
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.
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Don's Making Europe Great Again, being to investors it looks more stable than Orangeland.
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Now in 2025 many are in fact moving out. Especially scientists.
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Just the same as so many dumbasses swore they were leaving when Obama was elected in 2012 and 2016. But you want to take hyperbole as earnest statement, apparently only when it's the "others" saying it.
No wonder you posted this tripe AC.
Re:The plan (Score:4, Interesting)
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.
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I feel you are incredibly optimistic, but I hope you're right.
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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?
Re: (Score:2)
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.
No that's not the plan unfortunately (Score:2)
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)
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.
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He may very well have decided that he has the luxury (both in time and money) of simply waiting until Trump is gone.
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Apple might also like their odds in court.
A lot of people are uncomfortable with the idea of a President arbitrarily slapping individual companies with huge taxes on a whim, and a lot of them are Republicans.
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Maybe. But I doubt Cook wants to go to war with Trump. Just delay... promise... delay again..... whoops, so busy.... etc
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It would be the easiest court battle they've had in years.
It would be interesting to hear how the President feels that people paying 25% more for a phone has anything at all to do with his "fentanyl emergency" that he is using as the legal justification for the tariffs.
Is Apple importing fentanyl in iPhone boxes? No? Then these tariffs are not allowed under the laws he's using to try to establish the tariffs as there is no congressional authorization, and Congress sets tax and tariff rates according to th
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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
Re: (Score:2)
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 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.
Re: (Score:2)
Ah, but the de minimis rule in the US has been scrapped also. The average Joe USian looking to import on the grey market and save a few bucks now has to go through customs clearances and handling fees, even if they've used the old loophole of $900 handling & shipping fees on a "$100 product" with an actual sticker price of $950 and $50 profit for the grey marketeer. Different vendors vary, but most take a dim view on supporting warranties of grey imports, so Joe may also have to forego his warranty (I
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How is this insightful? If they don't like it don't buy a iphone.
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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.
They'll just wait him out. (Score:2)
He's only got 3.5 years left, and lots of that will be bogged down in other stuff.
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It's like when a toddler is having a mega-fit in public, there is often nothing you do can do solve it other than take the kid outside and wait out the tantrum.
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Who let the Fox out, ruff ruff...
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Have you been following your prescriptions? Taking your meds on schedule? If yes, I'd suggest an appointment with your psychiatrist, you might need an adjustment in dosages.
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Good job, comrade. Extra vodka ration for you.
Re: They'll just wait him out. (Score:1)
Beating this big bastard with a belt will fix that a LOT quicker. Especially when this adult baby has never heard the word âoeNoâ and told evry few minutes that the world is his playable sandbox.
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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.
Sounds like (Score:1)
These all sound like good arguments for what 145% tariffs were a good idea, and that is more like the rate they should have stuck with!
Re: (Score:1)
So what exactly was wrong with the global economy before orange jesus 2.0? Everyone seemed to be doing well with commerce humming along and stable markets. Cheeto couldn’t pass a junior high civics course and he’s meddling with a complex global economy.
Re:Sounds like (Score:5, Insightful)
1) ever increasing stratification
2) unconstrained deficit growth the western world over
3) increasingly brittle supply chains
4) economic demands for cheap labor, over coming any sense of cultural preservation or upkeep of national identity
5) loss of political autonomy and by extension real democracy
In short just about everything that could be systemically wrong with the global economy currently is, unless you believe we should embrace the One World Government, and toss our traditional values of things like religious freedom and individual liberty onto the ash heap of history.
Re:Sounds like (Score:5, Interesting)
1. How can we say this without addressing income inequality?
2. Republicans and Americans don't give a shit about the deficit, we can stop pretending like this matters, the current bill is set to spend more debt.
3. This is a concern but fucking with our allies I would suggest isn't going to help. I suppose we will see who's plan comes out better, Biden's 3 large investment bills (CHIPS, BP Infrastructure, IRA) work better than whatever the current strategy is.
4. IF UE in the US was high then maybe this is a top concern but it's historically low. Also whoever says anything about cultural preservation or national indentity needs to define what they are in the USA, not just say it and expect the reader to do the work. To me the most important aspects of that are our Constitutional system of rules and order which is currently being run roughshod so to me as an American Trump is actively destroying our identity.
5. See #4.
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> 1. How can we say this without addressing income inequality?
There is literally nothing you can imagine that would actually do more to correct income inequality in the US than decoupling from China and other bottom dollar manufacturing hubs.
Re: (Score:2)
Yes in fact I can imagine lot's of things besides a trade war that would address income inequality. Taxes, housing, healthcare, energy investments, more infrastructure, remove the cap on Social Security and resume it's full funding, education reform, childcare and senior care plans as these are drains on the middle and lower classes especially. Stop approving mergers and other terrible corporate governance. Targeted investments into building key industries. All of these for me would be far more benefici
Re: (Score:2)
> 1) ever increasing stratification
Well that definitely gets fixed by giving the top 1% huge tax breaks while passing on the tax burden to lower classes. Idiot.
> 2) unconstrained deficit growth the western world over
Well that definitely gets fixed by adding the largest rise in the debt ceiling ever voted on. Idiot.
> 3) increasingly brittle supply chains
Well that definitely gets fixed by adding a bunch of free-market surly tariffs on everything. Idiot.
> 4) economic demands for cheap labor, over coming any sense of cultural preservation or upkeep of national identity
And yet you still buy just as much cheaply manufactured crap as everyone else, and are happy with the pricing.
> 5) loss of political autonomy and by extension real democracy
You mean because we elected a compromised idiot that thought he had any re
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If you want to turn the US into a 4th world country, yes. (3rd world are trying to improve their economies...perhaps not successfully, but they're trying.)
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It's impossible to guess what is in Trump's mind, but
His plan seems to be to wait until the tax cuts get passed by congress. The he will bring back the tariffs, and use the (hoped for) economic benefit of the tax cuts to offset the economic impact of the tariffs.
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> this comment written on a slave tablet or i suppose you'll tell us how every function of your consumption is ethical
OK, Kettle. You can wipe the blackface off now.
The Pot recognizes you and that pointless argument.
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> *i typed this while jizzing on my tablet thinking so hard about the small chinese hands assembling it*
Now you're just *mocking* slave labor that still exists in the 21st Century, while happily opening your wallet to support it.
Previous generations understood that Pot and Kettle was the epitome of hypocrisy and accepted the fact that being a hypocrite was actually a bad thing. You are proving people are too stupid and selfish to even grasp that concept.
Local production (Score:3)
Other countries (eg Indonesia) also have a local production quota:
[1]https://techxplore.com/news/20... [techxplore.com]
[1] https://techxplore.com/news/2025-04-apple-iphone-indonesia-monthslong.html
Re: (Score:2)
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:2)
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:3)
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.
There is no economic incentive (Score:2)
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.
Could make sense (Score:2)
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
Trump is an idiot (Score:2)
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
They'll do a 50% price increase (Score:2)
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:2)
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.
Individual tariffs (Score:5, Funny)
So we're doing tariffs on a corporate basis now? The party of small government strikes again.
Re: (Score:2)
Just a Trump shakedown
Tim Apple will buy some Trump memecoins and the tariffs will go away for a few months.
Rinse. repeat.