Apple Inc (NASDAQ:AAPL) shares tumbled in pre-open trading Friday following President Trump’s threat to impose a 25% tariff on the company’s products if they are not manufactured in the United States. The announcement also affected U.S. stock futures, which saw declines of 1.2% to 1.7%.
As of 9:00 AM ET, Apple shares are down 3.2%. S&P 500 futures fell 1.4% and Nasdaq 100 futures fell 1.7%.
The President expressed his demands on Truth Social, insisting that iPhones sold in the U.S. should be made domestically rather than abroad. "I have long ago informed Tim Cook of Apple that I expect their iPhone’s 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. Thank you for your attention to this matter!" Trump posted.
This development comes as Apple’s key contractor, Foxconn (SS:601138), reportedly plans to invest $1.5 billion in a new facility in Tamil Nadu, India, to produce display modules for iPhones. The move is part of Apple’s strategy to diversify its supply chain, which currently extends to countries like Vietnam and Malaysia, with India becoming a significant focus of these efforts.
Despite the threats from Trump, analysts remain skeptical that Apple can produce iPhones in the U.S. anytime soon, and without the device’s price skyrocketing.
"The pressure from Trump Administration on Apple to build iPhone production in the US as we have discussed this would result in an iPhone price point that is a non-starter for Cupertino and translate into iPhone prices of ~$3,500 if it was made in the US which is not realistic as this would take 5-10 years to shift production to the US," Wedbush analyst Dan Ives commented following the news.
"We believe the concept of Apple producing iPhones in the US is a fairy tale that is not feasible."