India Still Cost-Effective for iPhone Production, Even with 25% U.S. Tariff

The Global Trade Research Initiative (GTRI) has recently stated that it is possible to manufacture iPhones in India even with a 25% tariff imposed by the United States on the importation of devices made in India. This confirmation comes after statements made by U.S. President Donald Trump in which he made clear his intention of imposing these tariffs in order to prevent Apple from moving production to India.

The GTRI report illustrates the global value chain of the $1,000 iPhone which has contributions from over a dozen countries. Apple gets the largest share of the value of the device approximately $450 through brand, software and design. Major U.S. component suppliers include Qualcomm and Broadcom who add $80 to the value of the iPhone. Taiwan also adds a value of $150 largely due to chip manufacturing. South Korea, Japan, Germany, Vietnam and Malaysia collectively supply parts worth $220.

Notably, China and India who are responsible for assembling, only make about $30 per device which is under 3% of the retail price. The report shows a glaring difference in labor: Indian assembly workers are paid about $230 per month and in U.S. states like California, the labor cost can reach around $2,900 in a month, almost thirteen times higher.

While assembly in India is $30 for an iPhone, assembly costs in the U.S. are around $ 390 so it’s much cheaper to manufacture in India. Plus, Apple is benefiting from the country’s Production Linked Incentive (PLI) program which keeps their costs down even more.

If Apple were to move all manufacturing into the U.S., the profits per iPhone would drop from $450 to $60 unless they raised their prices tremendously. The report illustrates how global value chains and labor costs still allow India to become a productive center for Apple even with U.S. trade restrictions.

To put it another way, “Made in India” iPhones will still be cheaper in the U.S., despite a 25% tariff while allowing Apple to continue to have a competitive advantage through global manufacturing.