How Much Would The IPhone Cost If It Were Made In America?

Even if President Donald Trump won his battle with Apple and the tech giant started to manufacture its iPhones in the United States, it might not even be a good idea.

Trump lashed out at Apple recently after the company said the White House’s proposed $200 billion tariffs on Chinese goods would hurt its business. Trump tweeted: “Make your products in the United States instead of China. Start building new plants now.”

It’s tempting to write off Trump here as just tweeting populist rhetoric, but he actually does hit on something interesting — should Apple be making more of the iPhone and other products in the US?

If Apple managed to bring manufacturing jobs to the United States, analysts say that assembling the iPhone here wouldn’t actually make it much more expensive. As Konstantin Kakaes wrote in the MIT Technology Review in 2016, putting together the iPhone in the US from parts made abroad would only cost about $30 to $40 more per phone, a modest increase for a device with a 64 percent profit margin. Even if every part was made in the US, an iPhone would cost about $100 more, Kakaes concluded, assuming raw materials were still purchased on global markets.

The issue is not so much cost of putting an iPhone together, or even the cost per part on paper. The issue is skill, scale, expertise, and infrastructure — all of which require money, time and long-term investment. Unlike other manufacturing jobs that have migrated from the United States, Apple wouldn’t be bringing them “back” so much as starting from scratch. The cost would come in attempting to build a system that’s never been in the US, but has been built over decades abroad.

And even if Apple could somehow manage to bring the whole process to the United States, at a huge cost, there might not even be much of an advantage in terms of global trade. China makes only about $8 per phone, so placing Apple and its supply chain in the midst of the US-China trade dispute just isn’t that smart.

“It always sounds good when a president sounds tough on trade and issues protectionist policies,” Wayne Lam, principal analyst at information and analytics firm IHS Markit, told me. “We just don’t have the sheer workforce size nor skill set to be good at consumer electronics manufacturing.”

Apple prices may increase because of the massive Tariffs we may be imposing on China - but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting! #MAGA

— Donald J. Trump (@realDonaldTrump) September 8, 2018

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