1 week Ago By Rob Thubron
In brief: President Trump's 104% tariff on goods imported from China is now in effect. It will have an enormous impact on many US firms, especially Apple, which relies heavily on China to manufacture its iPhones. Trump believes the solution is to start making the handsets in the US, but that would be nearly impossible, especially in the short term.
And even if it were, iPhones would likely become much more expensive. Trump has said that if companies want to avoid the tariffs placed on countries such as China, Vietnam, Thailand, and India, they should move their manufacturing to the United States. But that's a lot easier said than done.
With the tariff on Chinese goods now up to 104%, we're waiting to see how Apple responds. The company transported five planeloads of iPhones and other products from India and China to the US over a three-day span during the final week of March, giving itself a buffer against the tariffs. When asked if Trump believed iPhone manufacturing could move to the US, Press Secretary Karoline Leavitt said "Absolutely, he believes we have the labor, we have the workforce, we have the resources to do it.
" Leavitt also mentioned the $500 billion Apple has committed to investing in the US. "If Apple didn't think the United States could do it, they probably wouldn't have put up that big chunk of change," she said. Most of Apple's $500 billion investment will go toward building a new advanced manufacturing facility in Houston that will produce servers for supporting Apple Intelligence.
Manufacturing the iPhone domestically would require moving Apple's supply chain to the United States. As noted by 440Media, the idea of a US-made iPhone is " pure fantasy ." Also read: Apple's China exposure makes it most vulnerable in US-China trade war Apple's 27-page supplier list includes more than 50 countries, most of them in Asia, where iPhone components are manufactured.
Then there are the required minerals that are sourced from 79 countries, from 200 different refineries and smelters – just 20 of those smelters are in the US. Overall, Apple has more than 320 suppliers who employ at least 1.4 million people.
US secretary of commerce Howard Lutnick said over the weekend that the "army of millions and millions of people screwing in little, little screws to make iPhones, that kind of thing is going to come to America." Lutnick: "The army of millions and millions of human beings screwing in little screws to make iPhones – that kind of thing is going to come to America." [image or embed] The reality of iPhone manufacturing is obviously a lot more complicated.
Apple CEO Tim Cook said in 2017 that the reason companies use China is not because of the low labor costs, which are now higher, but the skill and type of skills available in one location. "It is like the products we do require really advanced tooling and the precision that you have to have in tooling and working with the materials that we do are state-of-the-art, and the tooling skill is very deep here," Cook said. "China put an enormous focus on manufacturing.
The U.S., over time, began to stop having as many vocational kind of skills.
I mean, you can take every tool and die maker in the United States and probably put them in a room that we're currently sitting in. In China, you would have to have multiple football fields," Cook said in an interview with 60 Minutes in 2015. In addition to the dearth of required skills, there are questions over how many Americans would want to take sweatshop-style manufacturing jobs that can be hard, monotonous, and depressing.
Then there's the salaries. US machine operators made an average of $43,000 annually in 2022, while the same profession in Vietnam made less than $5,000 annually. Reports say that if Apple somehow were to make an iPhone in the US, the extra costs passed on to consumers could push the handset's price to $2,300.
Apple's previous attempt at manufacturing in the US involved the Mac Pro in 2013. Assembled in Austin, Texas, the machine was delayed for months due to various issues – one of them being a screw shortage ..
