The "iPhone USB" network interface has not been set up.

I know this is an old question, although I've only recently started seeing this phenomenon. I don't consider this to be a solution, but it is a solid workaround.

It's not about having hotspot enabled. Mine is never on.

What I did was opened the Network settings, clicked the + button to add a new network interface, and chose iPhone USB (your phone might have to be plugged in for this option to be available, but I'm not sure).

Then, with iPhone USB selected in the list, click the gear icon and set it to be inactive. Apply the changes, and you're done.

I'm having this issue; just started a couple of days ago. I don't have personal hotspot turned on, but get this prompt every single time I plug in my iPhone. Any ideas?

I've also been getting this message every time I plug my iPhone5S into my iMac. I don't have Personal Hotspot configured. I think this started shortly after iOS was updated recently.

You have personal hotspot turned on/setup on your phone? If so, that's why you're getting that message.

Thank you so much! That's been bugging me for weeks!

I also have this problem, but I DO NOT have personal hotspot enabled.

Thanks, that seems to have stopped the message popping up every time I plug in my iPhone5S, although as you said it's only a workaround.🙂

Thank you so much, creating a iPhone/USB interface to make it inactive seems too work.

At last I got read of this annoying popup.