AAPL
📱 Manufacturing an iPhone 16 Pro costs roughly $500 in Asia; proposed tariffs could add $300 to this cost base due to the complexity and value of components imported.
💲 This potential $300 cost increase translates to a possible 30% price hike for iPhones sold in the US, a significant jump that could dampen consumer demand.
🏭 Relocating iPhone production to the US is deemed economically inviable, with studies suggesting a US-made iPhone could cost $3,500 retail versus the current ~$1,000, highlighting Apple’s dependency on its current supply chain despite tariff risks.
@Artedeinvertir:
“We can see this same thing with the example of Apple. Just yesterday, the Wall Street Journal published this graph of the effect that these potential tariffs would have on the iPhone. Before the tariffs, manufacturing an iPhone, the iPhone 16 Pro, in the United States costs $500. This then, in the United States, from $500, they are selling for more or less $1,000-$1,100, so Apple’s gross margin is quite good. The additional tariff of 54%, with the reciprocity announced by China and everything that will increase because there was already 20% and so on, well, the point is that the tariffs add $300. So, in the case of an iPhone, it’s different because the cost of manufacturing it, compared to what Nike sells, a sneaker, the manufacturing cost is very low; it’s all marketing, distribution, stores, the profit margin that Foot Locker takes, for example, if it sells the sneaker. But here, no, as it’s a more technically complex element, it would be higher. So a 54% tariff on Apple would cause the price of iPhones in the United States to rise by 30%, and this is indeed a significant increase. Would people still buy it? Probably yes, but surely fewer units will be sold, which is why the shares have dropped, because the United States is probably the most important market for a company like Apple. And this is very interesting because Wedbush, an important investment banking firm, did a very detailed study some time ago, which I will show you now, of what it costs to manufacture an iPhone or the selling price. In China, the famous Foxconn that manufactures them for Apple, we would be talking about a price of $1,000. If they tried to manufacture this in the United States, this investment firm calculated that the iPhone should be sold at $3,500. We are talking about things that make it unviable to bring back the production of Apple, Nike, or these certain companies to the United States. And the politicians and government experts in the United States know this, Scott Bessen knows it, Donald Trump knows it, and everyone knows it. It’s not going to happen that they bring the production of these items to the United States because it doesn’t matter; before, the iPhone cost $1,000, now it will cost $1,300, but it’s still 1,000 times more competitive than the $3,500 it would have to charge if the same iPhone were manufactured entirely in the United States.”
Watch the exact part of the video where Arte de Invertir talks about Apple here:
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