iPhone Won't Be Made In US Anytime Soon: Analysts

Arthur T Knackerbracket has processed the following story:

US President Donald Trump can huff, puff, and threaten to blow Tim Cook's house down with a 25 percent iPhone import tariff, but analysts say even that threat is unlikely to bring Apple's manufacturing home.

In response to Trump's statement last week, analysts from Morgan Stanley published a research brief on Tuesday that concluded Apple is unlikely to respond to Trump's latest tariff threat in a way that will please him.

The report, provided to The Register, concluded that the original 145 percent tariff imposed by Trump on certain imports from China last month might have made Apple budge on the matter, but since the President lost his international staredown and promised to reduce that rate, the economics no longer make sense for Cupertino.

According to the Morgan Stanley number crunchers, an iPhone manufactured in the United States would be at least 35 percent more expensive than one made overseas when accounting for tariffs on single-source components still made in China and higher US labor costs. That means a $999 iPhone would be $1,350 - at a minimum - if Apple wanted to retain a similar gross margin.

[A] 25 percent tariff will have no effect; it will need to be many times higher to compensate for the local production cost

With a 25 percent tariff on iPhone imports from China or India in place, on the other hand, Apple would need to increase prices on iPhones by only four to six percent globally to keep profits up.

Canalys smartphone and IoT analyst Runar Bjorhovde agreed with Morgan Stanley's analysis in an email to The Register. "[A] 25 percent tariff will have no effect; it will need to be many times higher to compensate for the local production cost," Bjorhovde told us.

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