One is a global superpower with a vast empire in advanced electronic manufacturing, while the other is a key player in America.
World War Fee President Trump escalated his trade dispute with China this week. As a result, Americans will likely see higher prices on goods and parts coming from the country, since the substantial import duties imposed on these items are expected to be transferred to consumers....
Don’t worry if you’re looking for a fresh iDevice, since the White House thinks Apple can easily shift iPhone production back to the U.S. from China to dodge additional tariffs.
The White House press secretary, Karoline Leavitt, addressed this matter during a briefing yesterday when she was questioned about President Trump’s stance regarding comments made by his Commerce Secretary, Howard Lutnick, over the weekend. Lutnick had stated, “the massive workforce comprising millions upon millions of individuals assembling tiny screws for iPhones and similar tasks will start coming back to America.”
Leavitt, never hesitant to argue without evidence, maintained that the U.S. was fully prepared, eager, and capable of bringing iPhone production stateside despite the then-existing 104% tariff rate on Chinese imports. This percentage has since increased to 125%. In light of recent turmoil in the stock market, President Trump temporarily halted additional punitive tariffs on imported items from abroad for 90 days; however, this exemption does not apply to China, whose goods entering the American market now face an even higher tax burden.
"There’s a variety of different roles available: Traditional manufacturing positions as well as opportunities in cutting-edge technologies. The President is considering both areas. His aim is for these jobs to return to our country," Leavitt stated.
When asked about the possibility of actualizing iPhone production on American soil, Leavitt avoided addressing the question directly. However, she reinforced their stance by asserting confidently that America has what it takes to manage it effortlessly — no problem at all.
According to Leavitt, Trump thinks we possess the manpower, workforce, and materials necessary for this task. As you're aware, Apple has committed $500 billion within the U.S. If Apple doubted America’s capability, they likely wouldn’t have allocated such a substantial amount.
The investment Leavitt refers to does not include iPhone production. In February, Apple declared plans to invest more than $500 billion in the U.S. within the coming four years. However, similar to what was noted in our earlier coverage of this news, the statement emphasized various projects—such as building a server plant for their artificial intelligence endeavors in Texas—not involving iPhones.
R&D played a crucial role in Apple’s strategy, complemented by establishing a manufacturing training center in Michigan. This initiative sought to assist smaller enterprises in adopting sophisticated production methods. It highlights an essential fact: despite the government's positive outlook, neither the local labor force nor the necessary machinery, components, and infrastructure for mass-producing iPhones currently exists within the country.
Furthermore, Apple’s leaders have consistently stated that moving iPhone production to the U.S. is not feasible, pointing out the intricacies of the supply chain and the lack of skilled workers trained for manufacturing jobs as major issues.
In 2011, Steve Jobs openly informed President Barack Obama that bringing iPhone production back to the U.S. was improbable, and Tim Cook, who currently leads Apple, has also expressed comparable views.
In China, they placed significant emphasis on manufacturing and what we might refer to as vocational-type skills," Cook stated during a 2015 interview on 60 Minutes. "Meanwhile, the U.S. gradually started to have fewer programs for these kinds of vocational abilities.
"Essentially, you could gather every tools and dies manufacturer in the U.S. in this very room we’re sitting in. However, in China, they’d occupy several football fields," Cook further explained.
When asked about bringing Apple’s international activities back to the U.S., Cook responded saying, “It would increase my expenses by 40%,“ which he deemed unreasonable.
It remains uncertain if Apple’s stance on this issue has evolved over time—we’ve reached out but have yet to receive a response.
Apart from the financial impact on Apple, producing iPhones within the U.S. would probably result in significant price hikes for consumers in America. The choice seems to be between tariffs or higher domestic production expenses; take your pick. Generally speaking, most Americans do not wish to labor in factories under poor conditions and low wages, coupled with environmental concerns. Additionally, constructing these facilities would entail considerable expenditure. One alternative might involve recruiting inexpensive foreign workers, but the present administration at the White House is actively making things difficult for immigrants. Another option could be increased automation, though this approach leads to fewer job opportunities and demands specialized skills along with extensive research efforts.
Producers might choose to cover these expenses themselves, thereby cutting into their profits and potentially displeasing shareholders and affecting pension funds. Several paths exist, each carrying distinct advantages and disadvantages; this issue is far from being as straightforward as the Trump administration suggests. Imposing tariffs represents an overly simplistic solution for challenges requiring collaboration among businesses and government bodies, extensive education initiatives, and adept political maneuvering over the long term.
This week, Wedbush analyst Dan Ives suggested that a China-produced iPhone now costing $1,000 might rise to approximately $3,500 if produced in the U.S. Additionally, an April 3 report from Rosenblatt Securities indicated that tariffs could push the cost of theiPhone 16 Pro Max with 1TB storage—currently listed at$1,599—to almost $2,300. This projection does not even account for further intensificationoftheU.S.-China tradewar.
Ives explained to CBS News that claiming everything can simply be produced in the USA vastly underestimates the intricacies of the Asian supply chain and how electronics, semiconductor fabrication plants, hardware components, smartphones, among others, have been manufactured for U.S. customers over the past three decades.
Apple has attempted to reduce dependence on China by increasing iPhone production in India; however, this transition has faced numerous challenges such as infrastructure problems, insufficient workforce, and difficulties with maintaining product standards. Additionally, Chinese authorities have not facilitated Apple’s plans to move operations elsewhere. Reports suggest that the company has resorted to transporting large quantities of iPhones via air freight directly from India to the U.S. to bypass potential import duties specific to that country.
As the US brandishes the threat of increased import tariffs, China has not remained idle. The country responded earlier today by imposing an equivalent 84 percent import duty on U.S. products. This move makes it increasingly challenging for Apple to unwind its entangled supply chain operations.
If Apple attempted to shift manufacturing of iPhones from abroad back to the U.S., it would probably face significant resistance, and America isn’t prepared to succeed in this move without pressuring consumers.
In the meantime, Trump has targeted TSMC—the globe’s leading contract semiconductor manufacturer and a key supplier for Apple—threatening a 100 percent tariff should it fail to continue investing in U.S.-based fabrication facilities. TSMC is currently producing certain chips for Apple within the U.S., with plans to invest approximately $100 billion across the country.
In addition, according to an interview with The Register, Dipanjan Chatterjee, who serves as Vice President and Principal Analyst for Branding and Business Strategy at Forrester, stated that the “unpredictable nature” of Trump’s policies makes it improbable that Apple would undertake such significant measures. Even though Chatterjee thinks that the tech giant might be financially capable of doing so without burdening Mac and iOS enthusiasts, he doesn’t expect these policy fluctuations to drive them towards taking drastic steps.
“If these tariffs turn out to just be bargaining strategies, they might be short-term,” Chatterjee explained to us. “Regardless of whether that’s accurate or not, considering how unprecedented this trade policy is compared to past practices, regardless of which party holds power, there’s a strong likelihood it will eventually be overturned.”
Implementing extensive modifications to the production network is complex, costly, and drawn-out; reversing these alterations poses similar challenges," Chatterjee added. "Given this unstable climate, Apple would hesitate to undertake significant steps that are tough to execute and even tougher to reverse.
To put it differently, claiming that the US can readily begin producing iPhones is a significant overstatement of a highly complex issue—not something one would be surprised to hear from the Trump administration. After all, this is the group that believed levying tariffs on distant, unpopulated islands constitutes sound foreign policy.