U.S. Tariff Pressure on Apple
Donald Trump recently threatened Apple with a 25% tariff on its products if the company does not shift iPhone production to the U.S. Even with this threat, a recent report from the Global Trade Research Initiative (GTRI) indicates that it is still cheaper to produce iPhones in India. This is primarily because of lower wages and incentives offered by the Indian government.
Cost Comparison Between India and the U.S.
As per GTRI, it takes around $30 to manufacture an iPhone in India. In America, the cost goes up to $390. This is because of salary differences. One worker in India earns around $230 (Rs. 19,000) a month. In America, the same work can be done at up to $2,900 (Rs. 2.4 lakh). That's almost a 13-fold difference.
Support from Indian Government
India's Production-Linked Incentive (PLI) program provides additional financial incentive to producers such as Apple. This contributes to the cost benefit of producing iPhones in India. Even with a 25% tariff, Indian production is cheaper than in the U.S.
Global Manufacturing Network and Apple's Profits
Over 12 nations contribute to manufacturing iPhones. Apple earns a profit of roughly $450 on every iPhone because of its brand, software, and design. If Apple relocates manufacturing to the U.S., the price goes up. If Apple does not increase retail prices, its unit profit would fall from $450 to $60.
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