Trump 25% tariffs threaten Apple, Samsung, global supply chains
Additional tariffs could raise US smartphone prices by up to 30%, analysts warn
US President Donald Trump's threats to impose a 25 percent tariff on Apple and Samsung Electronics are putting the top two smartphone makers and their partner firms on edge, as the decision could disrupt the supply chains and drive up the price of phones in the all-important American market.
Trump threatened on Friday (US time) that he would impose a 25 percent tariff on Apple products unless they are built in the US on his social media platform, Truth Social.
'I have long ago informed Tim Cook of Apple that I expect their iPhone's that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,' Trump wrote. 'If that is not the case, a Tariff of at least 25 percent must be paid by Apple to the US.'
Just hours later, Trump expanded the 25 percent levy threat to include all smartphone makers, naming Samsung.
'It would be also Samsung and anybody that makes that product, otherwise it wouldn't be fair,' Trump told reporters at the White House, adding that the new tariffs would take effect by the 'end of June.'
It's still uncertain whether Trump will actually follow through with the proposed smartphone tariffs, or his remarks are primarily a strategic salvo aimed at pressuring Apple, with which Trump is reportedly at odds, to increase production in the US.
But if Trump actually goes ahead with the tariffs, it could upend the smartphone industry, raising the price of the gadgets, making it difficult for Samsung and Apple to remain price competitive in the US.
Apple and Samsung make up for about 80 percent of all smartphone sales in the US, with Apple taking the bulk of about 65 percent of the market share and 18 percent by Samsung based on the shipment figure as of the fourth quarter last year, according to data from market analyst Counterpoint Research.
Samsung does not manufacture smartphones in the US. Nearly half of the tech giant's global smartphone production is from Vietnam, and the rest takes place in South Korea, India, Brazil and Indonesia. Samsung smartphones, including from premium Galaxy S and foldable Z series to the mid-range A series, are most likely assembled in Vietnam, with some models also coming from India.
This means Samsung's upcoming releases, including the Z Flip and Z Fold models slated for the second half of the year, could fall under the proposed tariff.
A Samsung official in Seoul declined to comment on the matter.
Industry analysts say if Trump proceeds with his proposed 25 percent tariffs on smartphones not built in the states, Apple and Samsung will have to raise prices for their gadgets to pass the extra cost onto consumers. They say American consumers might face around 20-30 percent hikes on the prices of iPhone and Samsung Galaxy devices, depending on the model.
The potential price hike could dampen consumer demand, which would inevitably hurt sales volumes, especially in key markets such as North America, where premium models dominate.
Amid a flurry of Trump's tariffs policies, Samsung has been taking some steps to mitigate the impact of the tariffs. Samsung, during the latest conference call in April, said it will consider relocating production of certain volumes of TVs and electronic appliances to reduce tariff impacts.
But industry experts say, relocating Samsung's core smartphone manufacturing to the US in response to Trump's demands would be highly complex and costly.
'Producing smartphones in the US simply to avoid tariffs is not a feasible solution,' an industry source said on condition of anonymity. 'It's not just building the new assembly lines, but rebuilding the entire supply chain, which is costly and logistically complicated, as raw materials and equipment would also have to be moved together. Building phones in the US would make the phones costlier because of high labor costs and companies would rather decide to eat the cost than to relocate.'
It goes without saying that the same goes for Apple. Analysts say Apple is unlikely to move iPhone production to the US in the foreseeable future, even under Trump's pressure.
'In terms of profitability, it's way better for Apple to take the hit of a 25-percent tariff on iPhones sold in the US market than to move iPhone assembly lines back to the US,' Apple supply chain analyst Ming-Chi Kuo wrote on social media platform X.
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