Morgan Stanley analysts believe a 25% import tariff on iPhones won’t be enough to compel Apple Inc. (NASDAQ:AAPL) to move its iPhone manufacturing back to the United States.
“While ‘time to market’ of a U.S.-produced iPhone is one major impediment, our math says a 25% tariff on iPhone imports isn’t enough incentive for Apple to reshore U.S.-bound iPhone production,” analysts noted in a recent report.
According to their estimates, establishing domestic iPhone assembly facilities would be a major undertaking, requiring “a minimum of 2+ years, and several billions” of dollars in investment.
The discussion follows renewed tariff threats from former President Donald Trump, who last week floated the idea of a 25% import tax on iPhones. His comments were seen as a response to Apple’s ongoing strategy of shifting some iPhone production for the U.S. market from China to India.
Despite the political pressure, Morgan Stanley contends that the cost advantage still firmly lies with offshore production. “A U.S.-produced iPhone would be 35% more expensive than a China/India-produced iPhone, much more than the 4-6% price hike needed to offset a 25% import tariff,” the analysts wrote.
The note warned that the political implications could escalate. “CEO Tim Cook’s status with the current administration deteriorates from here,” Morgan Stanley cautioned, suggesting that Apple might be vulnerable to more aggressive trade measures. “Is a 50% tariff enough to shift production to the U.S.?” the firm asked rhetorically.
Morgan Stanley said it has already incorporated the potential for broader tariffs—ranging from 10% to 30%—on all U.S.-bound imports beyond the June quarter. As for the specific case of a 25% tariff on smartphones, the analysts estimate it would reduce Apple’s fiscal year 2026 earnings per share by just $0.11.
Nevertheless, the firm believes Apple may be able to defuse the situation by increasing its domestic investments under its already announced $500 billion U.S. spending plan.