According to Bank of America, Apple has the potential to transfer iPhone production to the United States, but while creating a logistical headache, the cost of manufacturing equipment is almost twice as much.
“The cost of iPhone is purely 25% of the increase in U.S. labor costs,” a Bank of America analyst led by Wamsi Mohan wrote in a notice to clients on Wednesday.
They added that while the technology giant can find domestic labor remittances, the part that makes the iPhone used to make the iPhone will still be assembled in China and imported into the United States. They estimate that assuming Apple has to pay mutual tariffs on these imports, its total cost will rise by 90% or more.
It is probably followed by President Donald Trump’s trade struggle in China. The Trump administration stopped reciprocity tariffs on dozens of countries for 90 days, but increased its responsibilities to China to 125%. Meanwhile, China’s retaliatory levy on U.S. goods is 84%.
Apple’s stock surged on the news, with its best day since July 2020 growing by more than 10%. But since Trump’s tariff announcement on April 2, stocks have continued 23% this year, losing 23% and reducing 14%, eliminating a $479 billion market cap.
Rosenblatt Securities warned last week that Levies could “blast” stocks. Wedbush’s Dan Ives, a long-term tech bull, lowered his target targets and pointed out that the tariff fight would be “complete disaster” for the company. Meanwhile, concerns about price will increase iPhone panic purchases last weekend.
Mohan wrote that for Apple to relocate its final iPhone rally to the U.S., it would require tariff exemptions on parts and subassemblies made outside the country. However, he did not see this happening.
“Unless the permanence of the new tariffs is clear, we don’t want Apple to take steps to take action on manufacturing,” Mohan said. The stock’s stock price and a price target of $250 are currently trading above $190. “However, we do hope that Apple will continue to diversify its supply chain and increase iPhone production in other countries in India.”
