President Donald Trump on Friday said he's prepared to levy tariffs of "at least 25%" on Apple products if Chief Executive Tim Cook doesn't commit to making iPhones in the U.S. Apple stock fell on the news.
Trump made the pronouncement in a post on social network Trust Social.
"I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a tariff of at least 25% must be paid by Apple to the U.S.," Trump said.
On the stock market today, Apple stock dropped 3% to close at 195.27.
Last week, Trump told reporters that he was not happy with Cook's decision to move production of U.S.-bound iPhones to India from China.
Wedbush Securities analyst Daniel Ives said it would be extremely expensive to produce iPhones in the U.S. In a client note Friday, he said such a move would result in iPhones costing about $3,500. Plus, it would take five to 10 years to shift production to the U.S. from overseas, he said.
"We believe the concept of Apple producing iPhones in the U.S. is a fairy tale that is not feasible," Ives said. "We see no chance that iPhone production starts to happen in the U.S. in the near term given the upside down cost model and Herculean-like supply chain logistics needed for such an initiative."
Trump's tariff threat comes days after Apple's contract manufacturer Foxconn revealed that it is investing $1.5 billion to expand iPhone production in India.
Apple Stock Down Year To Date
Cook's role at Apple is now perhaps 25% politician and 75% chief executive as he deals with a "complex tariff situation in a game of negotiations," Ives said.
Ives rates Apple stock as outperform with a 12-month price target of 270. Year to date, Apple stock is down 22%.
The proposed Trump tariffs would have to be on smartphone imports overall, not just on Apple iPhones, JPMorgan analyst Samik Chatterjee said in a client note Friday. Also, he believes that Apple could successfully pass on the increased cost of a 25% tariff to consumers.
"Moving manufacturing/assembly to (the) U.S. is challenging from a practical implementation, likely driving Apple to live with tariffs and price increases near term while waiting for more stability in policy," Chatterjee said.
Chatterjee rates Apple stock as overweight, or buy, with a price target of 240.
Speaking to reporters at the White House on Friday, Trump said tariffs on all smartphones not built in the U.S. are coming by the end of June. That includes handsets from Apple, Samsung and others.
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