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Investing.com -- A 25% tariff on iPhones imported into the United States is unlikely to drive Apple (NASDAQ:AAPL) to reshore its production, according to Morgan Stanley (NYSE:MS) analysts.
“While ‘time to market’ of a U.S.-produced iPhone is one major impediment, our math says a 25% tariff on iPhone imports isn’t enough incentive for Apple to reshore U.S.-bound iPhone production,” the analysts wrote.
They estimate it would take “a minimum of 2+ years, and several billions” to build new iPhone assembly plants in the U.S.
President Trump reignited tariff concerns last week, threatening a 25% import tax on iPhones.
The move appeared to be a response to Apple’s continued shift of U.S.-bound iPhone assembly to India, away from China.
However, Morgan Stanley said the economics still favor overseas manufacturing. “A U.S.-produced iPhone would be 35% more expensive than a China/India-produced iPhone, much more than the 4-6% price hike needed to offset a 25% import tariff,” the note said.
The bank believes Apple’s defiance could come at a cost. “CEO Tim Cook’s status with the current administration deteriorates from here,” Morgan Stanley warned, adding that Apple now risks further tariff escalation. “Is a 50% tariff enough to shift production to the U.S.?” the bank asked.
The firm noted that it has already factored in 10-30% tariffs on all U.S.-bound imports beyond the June quarter and estimates the proposed 25% smartphone tariff would only reduce Apple’s FY26 EPS by about 11 cents.
Despite the pressure, Morgan Stanley believes Apple could neutralize the threat with further U.S. investment, as part of its previously announced $500 billion commitment.