iPhones made in India, trouble made in D.C.

United States President Donald Trump has reignited trade tensions with a dramatic tariff threat against Apple Inc., warning that all iPhones and smartphones sold in the US but not manufactured locally could soon face a 25 per cent import duty.

“I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a tariff of at least 25 per cent must be paid by Apple to the US,” Trump said in a Truth Social post.

During a White House press event, Trump confirmed the tariffs would extend to all smartphone brands, including South Korea’s Samsung, declaring, “It would be also Samsung and anybody that makes that product. Otherwise, it wouldn’t be fair.” He added that the tariffs could take effect by the end of June.

The announcement sent Apple shares tumbling nearly 3 per cent on May 23, deepening a stock decline of over 20 per cent since Trump returned to office.

Recently, in a series of public statements and a post on Truth Social, Trump insisted that Apple must relocate its iPhone assembly operations to the United States, rejecting its current production strategies that prioritise China and increasingly, India.

Rise of India as Apple’s new factory hub

As Apple continues to diversify its supply chain away from China amid geopolitical tensions and rising costs, India has rapidly emerged as a key manufacturing alternative. According to India’s Commerce Ministry data, Apple assembled $22 billion worth of iPhones in India in FY25 (April 2024 to March 2025)—a 60 per cent increase from the previous year. India now accounts for 18 per cent of global iPhone output, up from just 7 per cent in 2022, and is projected to hit 32 per cent by the end of 2025.

This growth is fuelled by major investments from Apple suppliers. Foxconn recently announced a $1.5 billion investment in a new component facility in Tamil Nadu, expected to create 14,000 jobs. Tata Electronics is also scaling up its assembly operations as Apple aims to produce all 60 million US-bound iPhones in India by next year.

“India remains the only potential big manufacturing destination beyond China,” said Tarun Pathak, Research Director at Counterpoint, in an interview withMoneycontrol. He noted that the US lacks the necessary supply chain density, adding, “Even with subsidies, it would take 2-3 years to shift production meaningfully.”

Supply chain realities

The tariff threat has sparked concerns over rising costs for American consumers. Apple CEO Tim Cook has previously warned that tariffs would ultimately raise handset prices and disproportionately affect middle-class consumers.

Despite the political pressure, analysts argue that moving production to the US is neither simple nor economically viable in the near term. According to a report by the Global Trade Research Institute (GTRI), the final assembly of an iPhone, which is done in China and India, contributes less than 3 per cent to its retail value—about $30 out of a $1,000 device.

The GTRI report stated that each $1000 iPhone carries the imprint of at least a dozen countries. Apple, through its software, design, and brand, claims the lion’s share of the value, about $450 per device. US component makers such as Qualcomm and Broadcom add another $80.

Taiwan earns $150 for chip manufacturing, South Korea adds $90 for OLED (organic light-emitting diode) screens and memory chips, and Japan contributes $85, mainly via camera systems. Other countries like Germany, Vietnam, and Malaysia account for a modest $45 through smaller parts.

Repatriating iPhone assembly to the US would create jobs—an estimated 60,000 from India and possibly over 300,000 jobs if production also leaves China. However, labour costs in the US are significantly higher, with minimum monthly wages nearing $2,900, which is more than 12 times higher compared to $230 in India.

As a result, the cost of assembling each iPhone in the US would surge from $30 to nearly $390, severely cutting Apple’s per-device profit from $450 to about $60 unless retail prices soar.

Ming-Chi Kuo, an analyst with TF International Securities, wrote on X, “In terms of profitability, it’s way better for Apple to take the hit of a 25 per cent tariff on iPhones sold in the US market than to move iPhone assembly lines back to the US.”

Strategic consequences

Trump’s tariff stance comes at a sensitive time as India and the US are negotiating a bilateral trade agreement (BTA) during a 90-day pause in a previously announced reciprocal tariff.

Although the 25 per cent tariff threat is not specifically directed at India, its rapid rise as Apple’s production hub places it in the spotlight.

Ironically, the GTRI report argues that if iPhone assembly were to leave India, the country might benefit in the long term. By ceasing shallow assembly practices driven by subsidies and instead investing in core manufacturing technologies, like chipmaking and display production, India could move up the value chain.

The report pointed out that India earns less than $30 per iPhone, much of which is returned to Apple through production-linked incentives (PLIs). Moving assembly out might force India to focus on deeper manufacturing capabilities.

Meanwhile, Trump’s broader industrial strategy is clear: boost US employment and cut the trade deficit. Commerce Secretary Howard Lutnick recently commented on the technological gap, noting that Apple CEO Tim Cook told him iPhone assembly can’t move to the US until robotic automation meets Apple’s standards.

“He (Tim Cook) said, I need to have the robotic arms, right, do it at a scale and precision that I could bring it here,” Lutnick toldCNBC. “And the day I see that available, it’s coming here.”

As the June deadline for the tariffs looms, Apple faces an urgent choice: absorb the cost, shift strategy, or pass it on to consumers, all while navigating the stormy waters of global trade and domestic politics.