14 DAY TRIAL // United States President Donald Trump has restarted efforts to convince American companies to build their products locally and not in China, and Apple appears to be one of the targets.
In a tweet earlier this week, Trump warned that manufacturing the iPhone in the United States would mean zero taxes for the company, thus avoiding the China tariffs.
“Apple prices may increase because of the massive Tariffs we may be imposing on China - but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting! #MAGA,” Trump tweeted.
The iPhone, however, wouldn’t be affected by China tariffs, yet moving not manufacturing, but the assembly process to the United States could lead to a price increase for the device.
Substantial price increase
Bank of America Merrill Lynch says a price increase of at least 20 percent is estimated if the Cupertino-based tech giant transfers the entire assembly process to the United States.
“‘Back to US’ manufacturing seems to be back on the agenda for President Trump … We believe Apple could ask Hon Hai and Pegatron to shift a small portion of their iPhone manufacturing to the US in response to President Trump’s request,” analyst Wamsi Mohan is quoted as saying in a note to clients.
“The conclusion was for the iPhone (not currently impacted by Tariffs) moving production (100% of final assembly) to the U.S. would need 20% price increases to offset the incremental labor costs.”
No matter what way Apple decides to go, the price of the iPhone could still be increased. The analyst expects Apple to move approximately 10 percent of the assembly to the United States, projecting a price jump of 8 percent, which may eventually increase the final cost of the device.