Bank of America: If Apple (AAPL.US) makes iPhones in the US, the cost may soar 90%

The Zhitong Finance App learned that the Bank of America pointed out that Apple (AAPL.US) may transfer iPhone production to the US, but this will not only almost double the cost of equipment manufacturing, but it will also bring many logistics problems. A team led by Bank of America analyst Wamsey Mohan wrote in a note to clients on Wednesday: “The cost of the iPhone could increase by 25% just because of the high labor costs in the US.” Although the tech giant was able to find labor responsible for assembly in the US, “a large part” of the components used to make iPhones will still be assembled in China and then imported to the US. They estimate that assuming Apple has to pay equal tariffs on these imported parts, the total cost would rise 90% or more.

When this estimate was released, President Donald Trump was targeting China in a trade war. The Trump administration suspended reciprocal tariffs on dozens of countries for 90 days, but the tariffs on China were raised to 125%. Meanwhile, China imposed retaliatory tariffs of 84% on US goods.

Although Apple's stock price rose sharply after the news broke, rising by more than 10%, the best single-day performance since July 2020. However, since this year, Apple's stock price has been hit hard, with a cumulative decline of 23%. Since Trump announced the tariff policy on April 2, the stock price has fallen 14%, and the market value has evaporated by 479 billion US dollars.

Rosenblatt Securities issued a warning last week that tariffs could cause Apple's stock price to “plummet.” Wade Bush Securities analyst Dan Ives, who has long been optimistic about technology stocks, lowered Apple's target share price and pointed out that the tariff war would be an “complete disaster” for Apple. Meanwhile, due to concerns about iPhone price increases, consumers snapped up the product last weekend.

Bank of America analyst Mohan wrote that if Apple wants to make it possible to transfer the final iPhone assembly process to the US, it is necessary to exempt parts and semi-finished products manufactured abroad from tariffs. However, he believes this is unlikely to happen.

Mohan maintains a “buy” rating for Apple shares. The target share price is 250 US dollars. Currently, Apple's stock price is 199 US dollars. He said, “Unless the sustainability of the new tariff policy becomes clear, we don't expect Apple to take the step of transferring production to the US. However, we expect Apple to continue to diversify its supply chain and increase iPhone production in other countries such as India.”