Trump’s Proposed iPhone Tariffs: Why Manufacturing in India Still Makes Financial Sense for Apple**
Former U.S. President Donald Trump recently announced plans to impose a 25% tariff on iPhones sold in the U.S. if they are manufactured in India or elsewhere globally. However, a new report from the Global Trade Research Initiative (GTRI) suggests that even with such tariffs, producing iPhones in India would remain significantly cheaper for Apple compared to manufacturing them in the U.S.
Earlier this month, Trump revealed at the Doha Summit that he had urged Apple CEO Tim Cook to halt expansion plans for iPhone assembly in India, stating, “I don’t want you building in India… They can take care of themselves.”
Cost Comparison: India vs. the U.S.
According to the GTRI report:
– Labor Costs: Assembly workers in India earn around $230 per month, whereas in U.S. states like California, wages can soar to $2,900 per month—a 13-fold increase.
– Assembly Expenses: Manufacturing an iPhone in India costs Apple $30 per unit, while the same process in the U.S. would cost $390.
– Government Incentives: Apple also benefits from India’s Production Linked Incentive (PLI) scheme, further reducing costs.
Profit Impact on Apple
If Apple were to shift iPhone production to the U.S., its profit per device would plummet from $450 to just $60. To compensate, the company would either have to accept lower margins or significantly raise retail prices.
Global iPhone Supply Chain Breakdown
A $1,000 iPhone involves contributions from multiple countries:
– Apple (U.S.) retains the largest share—$450 in profit.
– U.S. suppliers (Qualcomm, Broadcom) earn around $80.
– Taiwan makes $150 from chip manufacturing.
– South Korea earns $90 for OLED screens and memory chips.
– Japan contributes camera lenses worth $85.
– Germany, Vietnam, and Malaysia collectively earn about $45.
India and China’s Role
Both India and China earn roughly $30 per assembled iPhone, accounting for less than 3% of the device’s retail value. Currently:
– India supports 60,000 jobs through iPhone assembly.
– China sustains 300,000 jobs in the same sector.
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