Former President Donald Trump has demanded that Apple manufacture its iPhones in the United States or face a 25% tariff. Trump expressed his displeasure with Apple CEO Tim Cook over the company's plans to manufacture iPhones intended for the U.S. market in newly built plants in India. He stated that if iPhones sold in the U.S. are not manufactured in the U.S., Apple will have to pay a tariff of at least 25%. This demand comes as Apple has been working to diversify its production capabilities, with some iPhone production already moved to India. Cook had anticipated a tariff burden of up to $900 million this quarter. Despite electronics being exempted from Trump's tariffs on China, a 10% universal tariff remains on most goods entering the United States.

Approximately 90% of Apple’s iPhone production and assembly is based in China. Trump reportedly confronted Cook about building US-bound iPhones in India, emphasizing his preference for domestic production. Treasury Secretary Scott Bessent has echoed Trump's sentiments, highlighting the importance of bringing back precision manufacturing to the US and securing the semiconductor supply chain. Apple already partners with TSMC, which has opened a chipmaking plant in Arizona, to produce some chips in the United States.

Apple has argued that it cannot manufacture iPhones in America due to a lack of skilled engineers and higher labor costs. The late Apple CEO Steve Jobs raised concerns about America's education system, noting the difficulty in finding enough industrial engineers in the U.S. to support factory workers. Tim Cook agreed with this assessment. Experts like Dan Ives from Wedbush Securities consider the idea of reshoring iPhone production a "fictional tale," estimating that US-made iPhones could cost more than three times their current price due to the need to replicate Asia's complex production ecosystem. Ives estimates it would cost Apple about $30 billion and three years to move just 10% of its supply chain to the U.S.

A 25% tariff on Apple products could lead to higher prices for US consumers. Apple is reportedly considering raising prices for its new iPhone lineup, although the company may avoid directly attributing the increases to tariffs. Apple announced a $500 billion investment to expand its US facilities, including a new server production facility in Houston to support Apple Intelligence, as well as expanding data center capacity and investing in corporate facilities and Apple TV+ show production.

Following Trump's tariff threat, Apple shares dropped 4% to $193.46. Wall Street also experienced a downturn, with major indices falling sharply. Trump also mentioned a potential 50% tariff on the European Union, causing further market instability. The VIX volatility index, a measure of market fear, rose by 18.5%. The president had previously paused reciprocal tariffs and is currently engaged in trade agreement discussions with multiple governments. Concerns remain about the unpredictability of US tariff demands.