Apple’s iPhone is 18 years old but despite the emergence of competition – most notably from Samsung – hundreds of millions of people still buy them.
Yet Apple’s innovative spirit has long departed, as I wrote in my April 2013 Forbes post. To be fair, Apple has made incremental improvements to the iPhone since it was launched in 2007 adding services – such as Apple TV, Apple Pay, and others that raise the cost for customers to switch to other smartphone vendors.
Even Apple sees a threat to the iPhone. “You may not need an iPhone 10 years from now, as crazy as that sounds,” Apple executive Eddy Cue testified in a May court case, reported the Wall Street Journal.
That threat could intensify because some consumers will not be willing to pay more than three times the current price for an iPhone. That is what could happen if President Donald Trump’s threatened 25% tariff drives Apple to shift iPhone production to the U.S..
Indeed, Trump’s dream of a ‘Made in America’ iPhone would be nightmare for Apple. How so? Building factories in the U.S. would require massive investments – $30 billion over three years to make a mere 10% of Apple’s iPhones in America, estimated Wedbush analyst Dan Ives, according to CNBC – resulting in much higher costs.
By passing along those higher costs to consumers, the iPhone price tag could more than triple to $3,500, CBS News estimated.
While there is a range of scenarios, such a high price could cost Apple as much as $153 billion in revenue – assuming 70% of Apple’s customers switch to a $1,200 Samsung smartphone.
That would represent a 39% drop in Apple’s 2024 total revenue of $391 billion which rose a mere 2% in 2024, according to Macrotrends.
I have requested comment from Apple and will update this post if I receive a response.
Apple’s Current iPhone Costs, Margins, And Prices
Apple has long been manufacturing most iPhones in China and has more recently shifted some production to India to avoid tariffs imposed by the Indian government which are aimed at encouraging more local manufacturing, according to Apple in China and India, a business school case I co-authored
Before Trump’s tariffs, the iPhone 16 Pro was priced about twice what it costs Apple to make it. For example, the 256GB version’s price is $1,100 – roughly 86% more than the $580 Apple spent for all the hardware, the assembly and the testing, reported the Wall Street Journal.
With Trump’s threatened 25% tariff, Apple’s all-in costs would rise to $725, Preserving Apple’s 86% markup would boost the price of the iPhone 16 Pro to $1,350 by my calculation.
Apple’s costs to make iPhones in India – where about 19% of the company’s iPhones were produced in 2024, according to Moneycontrol – are slightly higher. Due to higher supplier margins in India (8% versus 6% in China), the all-in cost to Apple of an iPhone made in India is $591, according to a JPMorgan report featured by Moneycontrol.
Paying the 25% tariff on the iPhones imported from India would raise Apple’s costs to $739 and preserving Apple’s 86% markup would result in a price to the consumer of $1,374, I calculated.
Apple’s iPhone Costs Would Rise If Production Moved To The U.S.
There is no clear agreement on how much the cost to make an iPhone would increase were all the company’s production to shift to the U.S..
However, experts seem to agree there are serious challenges to doing so – including the lack of sufficient workers with the needed skills, the higher pay those workers would demand, and the ultimate costs – factoring in ever-shifting tariffs – to import parts to the U.S. for final assembly, reported CNBC.
China has significant smartphone labor advantages over the U.S.. “Young Chinese women have small fingers, and that has made them a valuable contributor to iPhone production because they are more nimble at installing screws and other miniature parts in the small device,” supply chain experts told the New York Times.
China also has much more engineering talent. In 2017, China “had enough tooling engineers to fill multiple football fields, while the United States barely had enough to fill a room,” Apple CEO Tim Cook said, according to a Times report.
One analyst estimated the cost to assemble and test an iPhone in the U.S. would be five times higher than it would be in China. With a signing bonus of about $1,000, a Chinese worker gets pay $3.63 per hour – a fraction of California’s $16.50 minimum wage, noted CNBC.
One reason for the lower pay is that Apple suppliers do not pay workers for a full year. Millions of Chinese workers migrate to the factories – toiling from summer until Chinese New Year and living in dormitories near football-field sized factories, noted the Times.
So it comes as little surprise to read one analyst’s estimate of a $200 per iPhone cost to test and assemble an iPhone in the U.S. – a whopping five times more than the $40 per iPhone in China, according to a Bank of America Securities report from Wamsi Mohan featured by CNBC.
Apple will likely not shift its smartphone production to the U.S. due to the much higher domestic manufacturing costs and the investment required to revamp the company’s supply chain – resulting in a tripling of the higher-end iPhone price to as much as $3,500. “We believe the concept of Apple producing iPhones in the U.S. is a fairy tale that is not feasible,” Ives told CBS News.
How Much Apple Revenue Could Drop If The iPhone Price Triples
Some iPhone customers are likely to switch smartphone vendors when their current devices stop working. The unknown is how many of them would switch to a lower priced device from a rival such as Samsung.
Under a worst case scenario in which a more than 150% price increase drives 70% of iPhone buyers to a lower-priced rival, according to Apple Insider, Apple could lose approximately $153 billion in revenue from the customers who switch.
This is calculated based on 2024 sales of 232 million iPhones at an average price of $1,018, totaling $236.2 billion. If 70% (162.4 million) switch, the lost revenue from these customers would be 162.4 million × $1,018, or $165.3 billion.
Under a best case scenario – in which a mere 10% to 20% of consumers switch to an iPhone rival because of high customer loyalty to luxury goods, per a PhoneArena analysis of iPhone brand loyalty – Apple’s iPhone revenue loss from tripling its price would range between $23.6 billion and $47.2 billion, I estimate.
With Apple’s stock price down 20% in 2025, the company’s tariff troubles are bad news for investors – as are Apple’s ongoing innovation deficits, notes PhoneArena.
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