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Tuesday, May 27, 2025

Consumer confidence rebounded in May after five straight months of declines as President Trump dialed back his aggressive stance on tariffs against China. The latest index reading from the Conference Board was 98 in May, well above the 85.7 seen in April and the 87.1 economists had expected. The expectations index surged off its 13-year low seen in April, reaching 72.8 May, far above the 55.4 in the month prior. This marked the largest month-over-month increase for that metric since May 2009. read more


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Apple has committed to investing $500B in the US in terms of development teams and expanded manufacturing - just not for the iPhone - YET.

www.apple.com

As to whether the iPhone will come back, it doesn't matter too much actually. Apple will do the same calculation that they always do - the cost of tariffs vs. the labor increase vs. potential for further automation.

In my calculations, the 25% tariff would be roughly the same as Apple simply paying their assembly line people ~$24/hour. This is based on a $1000 selling price, 60% gross margin (product cost is ~$400 of which labor is ~$40 - assumed 8-10 hours of Chinese labor at $4/hour wage). If they use American labor at 6x the rate (~$24/hour) the cost would be ~$525 vs. $500 with a 25% tariff - and this is before any additional automation to reduce the labor hours required.

So, seems Trump is giving Apple the chance to do the right thing and simply move manufacture here. Up to them - but, if they choose not to, they can either eat the tariff or raise prices and lose market share.

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