Donald Trump’s pressure intensification over Apple () places the company in a crossroads. While the market observes its ability to keep the current levels of its profit margin, the company may have to deal with an increase in costs and unknown about the demand for iPhone 17.
Just over a month after his inauguration as US president, Donald Trump said in a White House speech that Apple CEO Tim Cook had promised to invest “millions, billions of dollars” in the country. On the morning of Friday (23), the agent charged the supposed promise: in the country if not locally manufactured them, promised Trump in a publication on his social network, the Social Truth.
“Apple Tim Cook for a long time that I hoped its iPhones sold in the United States of America will be manufactured and mounted in the United States of America, not India, or anywhere else,” the US president said.
Bringing the production of iPhone, the world’s leading product in the world, to the United States would represent a victory for Trump’s propaganded trade policy – increasing import taxes around the world to attract their factories back to the US.
But Cook really wants to produce in India.
Production diversification
Since the first management of the US President in 2018, Apple has increased its industrial capacity in India to escape tariffs against China, where 80% of the world’s embedded iPhones are produced, according to an Evercore ISI study published in May.
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In 2013, Indian Minister Piyush Goyal said Apple expected to produce 25% of its iPhones in the country. Evercore ISI estimates that 10% to 15% of the devices come from there.
“Two years ago, a year and a half ago, Apple has managed to reach price parity with China, but they still don’t have enough capacity to serve the whole American market,” explains WG manager’s partner and technology expert Guilherme Novello.
It is a scenario about to change. In one, CEO Tim Cook told investors expect that for the quarter ending in June “most iPhones sold in the United States will have India as their home country.”
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For Novello, although Trump actually imposed a 25% tax on iPhones manufactured outside the United States, the cost of American labor would not make up for a change in plants – not to mention the complete displacement of supply chains. (It is worth remembering, the US president has set a single 20% rate to India in his tariff, now 10% temporarily).
He argues, however, that the bill is not so obvious: simply accepting the rate could lead Trump to increase the pressure to attract the company. “Everyone knows that Trump uses this as a form of negotiation.”
Pass or absorb costs?
In one way or another, Apple would have few exits: to pass production costs in the United States to customers; Submit the cost of import tariffs to your customers; Absorb part of any of these costs, whatever the origin.
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Passing costs is not so simple. A new iPhone should have enough innovative features and design to stimulate demand for them, even with a release price still higher than previous ones.
Wall Street analysts estimate that moving iPhone production to the United States would increase the price of smartphones by at least 25%, a CNBC report says.
“Because the smartphone is already a very saturated market, Apple makes money with shortening cycle shortening and price increase. Offer more services, penetration of services at the base, etc,” says Novello. The tendency of this replacement cycle, however, has increased, which could increase the replacement cycle.
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For the WG partner, the company must absorb part of the cost increases. “This is a point of concern between the market: how will be the gross margin of Apple to mid -year.”
Apple expects the gross margin to fall from the 47.1% registered in the quarter balance ending in March to 45.5% to 46.5% in the next quarter. Even before Trump indicated rates on the iPhone, Apple estimated that new fiscal policies would lead to an increase of $ 900 million in costs.
Apple net sales in the United States accounted for 36.4% of a total of US $ 391 billion recorded in 2024.
