This article was published by The Australian Financial Review on 27 May, 2025. Click here to read the original article.
Top fund managers expect it will be customers and not shareholders who wear the cost if the Trump administration follows through with threats to slap a 25 per cent tariff on Apple and Samsung in an attempt to bring the manufacture of the world’s most popular phones to the United States.
The threat, specifically mentioning iPhones, sent markets lower late last week. All three major Wall Street indices closed lower on Friday, with the Nasdaq falling 1 per cent and Apple shares dropping more than 3 per cent on the news. Apple is the largest company on the global sharemarket index.
“If consumers want a $US3500 ($5400) iPhone, we should make them in New Jersey or Texas,” said Wedbush Securities’ Dan Ives, a prominent technology analyst who calculated how high the price of the Apple phone would rise should the company be forced to bring manufacturing to the US.
While prices vary, iPhones cost around $US1000.
Plato Investments’ David Allen, owns Apple in his global equities portfolio,said around 90 per cent of iPhones were produced in China, with most of the rest coming from India. According to Allen, a 25 per cent tariff on imports would add roughly $109 to the average iPhone’s $437 bill of materials – a cost that would likely be passed directly to American consumers.
“This is a tax on Americans, plain and simple,” he said . “The threat is more symbolic than practical – it’s about a protectionist agenda that faces significant feasibility challenges.”
Allen pointed to Apple’s struggles to manufacture in the US. In 2013, Apple’s attempt to produce the Mac Pro in Texas fell apart when suppliers couldn’t deliver even basic components like screws in sufficient quantities. “China has the scale and the workforce –the US simply doesn’t,” Allen said.
Indeed, China’s dominance in electronics manufacturing is partly due to its ability to quickly mobilise a large, flexible labour force. That presents another hurdle for companies looking to relocate production.
“Every year around Christmas, you get a new iPhone or Samsung upgrade, and suddenly, you need to hire 100,000 workers within weeks,” said Northcape Capital emerging markets portfolio manager Ross Cameron. “That kind of volatile, short-term demand is extremely difficult to manage in the US, where that labour force just doesn’t exist.”
While Apple may have the brand strength to pass price hikes on to wealthier consumers, Samsung could be more vulnerable. Its smartphones are less central to its overall business, but still a significant revenue stream.
“Samsung will probably be a little bit more impacted in the smartphone division,” said Cameron. “From an investment perspective, it’s not material enough to move the needle. Ultimately, these tariffs just mean higher prices for consumers.”
