IPhone prices could rise as much as 20 percent if Apple gives in to pressure from President Trump to start assembling its smartphones here in the U.S., according to Bank of America Merrill Lynch.
Trump tweeted on Saturday, urging the tech giant to start manufacturing its products in America to avoid his proposed tariffs on Chinese goods.
"Apple prices may increase because of the massive Tariffs we may be imposing on China - but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting! #MAGA," Trump tweeted.
And, according to BOA Merrill Lynch analyst Wamsi Mohan, Apple may just give in to the president’s request by asking its partners to bring some iPhone assembly operations into the U.S., which will lead to higher prices.
"The conclusion was for the iPhone (not currently impacted by Tariffs) moving production (100% of final assembly) to the U.S. would need 20% price increases to offset the incremental labor costs," Mohan wrote to analysts on Monday.
Apple shares also took a hit on the news, falling Monday after the report.
Trump’s tweet came a day after a letter from Apple to U.S. Trade Representative Robert Lighthizer was revealed, detailing all the products that would be affected by the president’s proposed tariffs on $200 billion worth of imported Chinese goods.
Apple, however, did not offer an estimate of how much the tariffs would increase its costs but encouraged Lighthizer to reconsider the measures.
"It is difficult to see how tariffs that hurt U.S. companies and U.S. consumers will advance the Government's objectives with respect to China's technology policies," Apple said in the letter.
"We hope, instead, that you will reconsider these measures and work to find other, more effective solutions that leave the U.S. economy and U.S. consumer stronger and healthier than ever before."