US President Donald Trump's latest warning of a 25% tariff on Apple's iPhone production unless it returns to the US has rattled global supply chain operators. While the threat aligns with Trump's longstanding protectionist stance, industry insiders say the implications—higher costs, potential production delays, and forced supply chain shifts—are too significant to ignore. Suppliers are reportedly in negotiations with Apple to determine the next steps.
Trump's broader smartphone ultimatum
Trump stated that smartphones produced outside the US—including Apple's iPhones and Samsung's Galaxy series—could face steep tariffs if companies do not relocate their manufacturing domestically. The move is framed as part of Trump's broader effort to spur US job creation and could take effect as early as the end of June 2025. For now, iPhones are temporarily exempt, but the clock is ticking.
Apple in the crosshairs
Analysts believe Trump is targeting Apple due to its high-profile status and the political weight of reshoring its supply chain. While Apple has diversified its production by shifting more capacity to India, Vietnam, and Thailand in recent years, Trump has made clear that only moves benefiting US employment will satisfy his administration.
Negotiations underway with tight deadlines
Negotiations are reportedly underway between Apple and Trump's team to secure possible exemptions or concessions. The outcome will shape Apple's ability to proceed with its 2026 iPhone production timeline. If a deal isn't reached before the transition period from late June to mid-August 2025, the entire iPhone production schedule could be thrown into disarray.
Asian suppliers face mounting pressure
For Apple's supply chain—largely based in Taiwan and Southeast Asia—the uncertainty is growing. Many suppliers already shifted resources out of China to align with Apple's non-China manufacturing strategy. But now, with the US remaining Apple's most critical market, suppliers are under pressure to adapt once again—this time to a potential US reshoring mandate.
Cost implications threaten pricing stability
Some suppliers note that the cost of iPhone production reshoring could increase prices by over 50%, a burden no single stakeholder is willing to absorb alone. While Apple could pass the additional costs on to consumers, this risks pushing up inflation and reducing demand, especially in a highly price-sensitive market.
Investment decisions on hold
In the short term, Apple and its partners are weighing whether to continue investing in expanded capacity across Asia or hold off until the tariff picture becomes clearer. Some server manufacturers have already begun shifting production to Texas, but no such concrete plans exist yet for iPhones or other consumer devices.
Given the underdeveloped manufacturing ecosystem in the US and high operational costs, most observers believe Apple will either absorb the tariffs or raise prices, rather than fully reshore iPhone assembly. Still, Trump's tariff threat and the political climate ahead of the 2026 election may push the tech giant to make partial concessions.
Article edited by Jerry Chen
