iPhones Could Be More Expensive By 20% If Apple Takes Heed Of Trump’s Plan

An attendee uses a new iPhone X during a presentation for the media in Beijing (Photo: REUTERS)

The prices of iPhones could shoot up as much as 20 percent from its current price range should Apple decides to take heed of President Trump's advise to assemble its smartphones in the US, a major American banking analyst revealed.

As recently reported on this site, Trump told the Cupertino-based tech giant via a Twitter post made on Saturday that the company should now consider manufacturing its tech products at home and not in China so that it won't be affected by his latest array of proposed tariffs on Chinese import products.

In the statement he made on the social media platform which was later on quoted over at Reuters, the POTUS said that there is certainly the likelihood for prices of Apple products to increase due to the impending levies set to hit China. The solution, according to the US head of state, would be for the fruit company to build new manufacturing plants in the US soil.

Not only would Apple enjoy zero tax rate, the smartphone maker will also benefit from tax incentives, Trump added on his tweet.

The tweet came a day after Apple announced that the prices for its Apple Watch, Airpods, Mac Mini, and Apple Pen will likely to increase in the line of the recent tariff policies.

Bank of America Merill Lynch analyst Wamsi Mohan pointed out the possibility that Apple might give in to the pressure put by the Trump administration. The company could ask its manufacturing partners to bring home some of the iPhone assembly operations which will definitely result in increased prices, the report from Fox Business said.

By doing so, Mohan added, it could handicap the China trade risk while potentially ramp up the US manufacturing. The fact still remains though that by moving 100 percent of the production to the US, Apple would need to hike up the prices of its products around 20 percent in order for the tech firm to compensate the rising labor costs.

The financing analyst went on to offer more probable scenarios. First is Apple would only opt to move only around 10 percent of the iPhone assembly operation to the US, CNBC stipulated. In this case, Mohan said, the average price point for the iPhone would nudge up by 8 percent.

The second scenario would be for the tech firm to shift 50 percent domestically and this could bring in a 14 percent increase.

Mohan reiterated the fact that US labor forces are more expensive than in China. According to the resource person, the wage of an American worker is 2.6 times higher than his Chinese counterpart.

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