Apple: Is shifting iPhone manufacturing to US a real possibility?

Published 14/04/2025, 18:34
© Reuters

Investing.com -- Apple may be able to weather near-term tariff headwinds from rising U.S.-China trade tensions, and while relocating iPhone manufacturing to the United States is not imminent, it could be "conceptually possible," Bank of America said.

The U.S. announced a temporary reprieve from new 125% reciprocal tariffs for consumer electronics, sparing Apple (NASDAQ:AAPL) for now.

Electronic imports from China remain at the previous 20% rate, but this is expected to be short-lived. Officials signaled that electronics, semiconductors, and solar cells may still be included in upcoming sector-specific tariffs.

BofA refreshed its tariff impact analysis for Apple, assuming a 20% tariff on Chinese-made electronics and no tariffs on Indian exports.

Under this scenario, the hit to Apple’s earnings per share in calendar 2026 could be about $0.41, or a 4.9% drop, if the company absorbs all costs and keeps prices unchanged. That compares to a previously estimated 36.6% earnings hit under steeper tariffs.

If Apple were to raise U.S. prices by around 10%, the EPS impact would shrink to just $0.11, or 1.2%, even accounting for a projected 5% drop in units sold, the bank said.

Apple is already producing some iPhones in India, with about 15 million units expected to be exported to the U.S. tariff-free.

However, the remaining 35 million iPhones as well as all iPads and Macs sold in the U.S. would face the 20% tariff if they continue to be made in China.

While the risk of a broader trade war still looms, BofA noted Apple could take several steps to soften the blow, such as raising prices, adjusting supply chains, lobbying for exceptions, or slowing its product release cycle.

As for shifting iPhone manufacturing to the U.S., BofA estimates it would cost about 25% more than producing in China, mostly due to higher labor costs. But increased automation and less frequent product launches could reduce that burden over time

Despite the uncertainty, BofA reiterated its Buy rating on Apple, citing resilient margins, strong cash flows, and steady capital returns. The price objective remains $250.

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