Made in India iPhones Stay Cheaper in US Even After Trump’s 25% Tariff, Says GTRI

A recent report by the Global Trade Research Initiative (GTRI) reveals that even if the United States were to impose a 25% tariff on iPhones assembled in India, manufacturing costs would still remain significantly lower than producing the same devices in the U.S. The findings come amid a statement by U.S. President Donald Trump, threatening to levy such tariffs should Apple continue its production shift towards India.

iPhone Value Chain: India’s Role and Cost Advantage

The GTRI report outlines the intricate global value chain of a $1,000 iPhone, comprising contributions from over a dozen countries. Apple, leveraging its brand, software, and design, retains the largest share of value at around $450 per device. U.S. component makers, such as Qualcomm and Broadcom, contribute approximately $80, while Taiwan adds $150 through chip manufacturing. South Korea accounts for $90 via OLED screens and memory chips, and Japan contributes $85 through camera systems. Additionally, countries like Germany, Vietnam, and Malaysia supply smaller components worth $45 in total.

Despite China and India playing key roles in iPhone assembly, their combined earnings per device stand at only $30 less than 3% of the total retail price. This highlights the relatively low value capture by the countries involved in the final stages of manufacturing.

Cost Comparison: India vs. the United States

According to the GTRI report, the most significant factor making India an economically viable manufacturing destination is the sharp disparity in labour costs. Assembly workers in India earn roughly $230 per month, whereas their counterparts in U.S. states such as California may command wages close to $2,900 per month due to statutory minimum wage laws. This reflects a 13-fold difference.

As a result, assembling an iPhone in India costs about $30, while the same process in the U.S. would cost nearly $390. Even with a 25% tariff, the economics remain in favour of India. Moreover, Apple benefits from India's production-linked incentive (PLI) scheme for iPhone manufacturing, further enhancing the cost advantage.

The report further states that if Apple were to relocate production to the U.S., its profit margin could fall from $450 to just $60 per device, unless there is a significant increase in the retail price of the iPhone.

Read More: Apple Reasserts India Manufacturing Plans Despite Trump’s Objections

Conclusion

The GTRI findings make it evident that India's role in iPhone manufacturing is bolstered by its low labour costs and favourable government policies. Even with potential U.S. trade restrictions, India continues to be a financially prudent choice for Apple’s assembly operations.

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