A recent report by the Global Trade Research Initiative (GTRI) suggests that even if the United States imposes a 25% tariff on iPhones manufactured in India, the overall production cost would still be lower compared to manufacturing them within the U.S. This analysis surfaces amidst a statement from U.S. President Donald Trump, who threatened to impose a 25% tariff on iPhones should Apple choose to manufacture them in India or elsewhere outside of the United States.
The GTRI report dissects the value chain of a $1,000 iPhone, highlighting the contributions from various countries. Apple itself retains the largest share, approximately $450 per device, attributed to its brand, software, and design. U.S. component makers like Qualcomm and Broadcom contribute around $80, while Taiwan adds $150 through chip manufacturing. South Korea's contribution amounts to $90 through OLED screens and memory chips, and Japan supplies components worth $85, primarily camera systems. Germany, Vietnam, and Malaysia collectively contribute another $45 through smaller parts.
Interestingly, China and India, despite being major hubs for iPhone assembly, earn only about $30 per device, which is less than 3% of the iPhone's total retail price. Despite these relatively low assembly earnings, the GTRI report posits that manufacturing iPhones in India remains economically advantageous, even with a 25% tariff in place.
The primary driver behind this cost-effectiveness is the significant difference in labor costs between India and the U.S. In India, assembly workers earn approximately $230 per month. In contrast, labor costs in U.S. states like California can reach around $2,900 per month due to minimum wage laws, marking a 13-fold increase. Consequently, the cost of assembling an iPhone in India is roughly $30, while the same process in the U.S. could escalate to around $390, according to GTRI.
Trump's stance on iPhone manufacturing has been clear, urging Apple CEO Tim Cook to reshore production to the U.S. He has publicly stated his expectation that iPhones sold in the U.S. should be manufactured and built within the country, not in India or elsewhere. To emphasize this point, Trump has warned of a "Tariff of at least 25 per cent" on iPhones imported into the U.S. should Apple fail to comply.
This situation has sparked debate and analysis regarding the potential impact on Apple and consumers. Some analysts predict that the price of the next iPhone could triple if manufactured in the U.S., making tariffs a less severe financial burden for the company and its customers. The possibility of a $2,300 iPhone has also been floated in the event that production shifts to the U.S.
Currently, goods manufactured in India are subject to a 10% import tariff in the U.S., lower than the 30% tariff applied to goods from China. If Trump's proposed 25% tariff is implemented, it would likely be added on top of the existing 10%, potentially raising the total tariff to 35%.
Apple has been strategically shifting some of its iPhone production to India to circumvent tariffs on goods made in China. In fact, Apple assembled $22 billion worth of iPhones in India in FY25. Key suppliers like Tata Electronics, which recently commenced iPhone assembly operations including the iPhone 16 and 16e models at its Hosur facility, are also expanding their assembly lines. Foxconn Technology Group's factory is another major hub for India-made iPhones.
While the future of iPhone tariffs and manufacturing locations remains uncertain, the GTRI report provides data-driven insights into the cost dynamics at play. The labor cost advantage in India appears to be a significant factor that could sustain India's position as a cost-effective iPhone manufacturing hub, even if tariffs are imposed.
