Made-in-India iPhones Remain Cheaper in U.S. Despite Trump's 25% Tariff: GTRI Report
A GTRI report reveals that even with a proposed 25% U.S. tariff, iPhones manufactured in India would still be more cost-effective than those made domestically, due to significantly lower labor costs and government incentives.
In a recent analysis by the Global Trade Research Initiative (GTRI), it has been revealed that iPhones manufactured in India would continue to be more cost-effective in the United States, even if a proposed 25% tariff by former President Donald Trump is implemented. The report underscores India's competitive advantage in electronics manufacturing, primarily due to lower labor costs and supportive government policies.
The GTRI report indicates that assembling an iPhone in India costs approximately $30, whereas the same process in the U.S. would amount to around $390. This stark difference is attributed to labor expenses, with Indian assembly workers earning about $230 per month compared to their U.S. counterparts, who earn approximately $2,900 monthly .
Even when factoring in the proposed 25% tariff—equating to $250 on a $1,000 iPhone—the total cost for an India-manufactured iPhone would be around $280. This remains significantly lower than the cost of producing the device entirely in the U.S.
The report also highlights the global value chain involved in iPhone production. Apple retains the largest share of the value, about $450 per device, through its brand, software, and design. U.S. component makers, such as Qualcomm and Broadcom, contribute $80, while Taiwan adds $150 through chip manufacturing. Other countries like South Korea, Japan, Germany, Vietnam, and Malaysia collectively contribute to the remaining value .
India's role in this value chain is further bolstered by the Indian government's Production-Linked Incentive (PLI) scheme, which offers financial incentives to companies for local manufacturing. This policy not only reduces effective costs for manufacturers like Apple but also strengthens India's position as a global manufacturing hub.
Former President Trump's proposal aims to encourage companies like Apple to relocate their manufacturing operations to the U.S. However, the GTRI report suggests that such a move would drastically reduce Apple's profit margins—from $450 to just $60 per iPhone—unless retail prices are significantly increased .
Analysts believe that despite political pressures, economic factors will likely drive Apple's manufacturing decisions. The cost advantages of producing iPhones in India, combined with the country's growing infrastructure and skilled workforce, make it a favorable location for Apple's production needs.
In conclusion, the GTRI report emphasizes that even with potential tariffs, India's manufacturing ecosystem offers a cost-effective solution for Apple. This scenario underscores the complexities of global supply chains and the challenges in reshoring manufacturing operations to the U.S.
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