US President Donald Trump "absolutely" believes Apple can make its iPhones and other devices in the United States, press secretary Karoline Leavitt said at a press conference today.
She also mentioned Apple's $500 billion investment in the U.S. announced earlier this year. "And as you know, Apple has invested $500 billion in the United States, so if Apple thinks the United States can't do it, they may not invest such a large amount of money."
Trump plans to impose high tariffs on China, Vietnam, Thailand, India, the European Union and other countries starting from April 9. He claimed that if companies like Apple don’t want to pay tariffs, they should produce in the United States. Although Trump suggested that Apple could move its extremely complex supply chain to the United States, this is almost impossible. Regardless of the cost of such a move, Apple and its suppliers are unlikely to find enough talent with the necessary skills in the United States. Cook commented on China's manufacturing industry in 2017, saying that Apple's iPhones are assembled in China because China has very advanced manufacturing expertise.
People have misunderstandings about China. Let me give you my opinion. The common belief is that companies come to China because of low labor costs. I'm not sure where in China they go, but the fact is that China stopped being a low labor cost country many years ago. The reason is skills, the number of skills in a place, and the type of skills.
Just as our products do require very advanced tooling, the precision we have to achieve in tooling and material processing is state-of-the-art. And the tool skills here are very deep. You know, in the United States, we could have a meeting of tool engineers, but I'm not sure we could fill the room. In China, they can fill several football stadiums. This is why career expertise is so deep.
U.S. Commerce Secretary Howard Lutnick made similar comments about iPhone manufacturing over the weekend, as 404Media pointed out today in an article titled "'A Made in America iPhone' Is a Fantasy." Lutnick said that "millions of people are twisting little screws in making iPhones, and this is going to come to America," suggesting that neither he nor Trump understands how Apple operates.
404Media highlighted Apple's 27-page supplier list [PDF], which lists Apple sourcing components from more than 50 countries. This does not include rare earth minerals from 79 countries that cannot be mined in the United States. Apple can't avoid tariffs by "manufacturing" in the United States because it's impossible to make all iPhone components in one country. Even if we limit "manufacturing" to device assembly, and the U.S. has the required skilled workers (which it doesn't), the cost of living and wages in the U.S. would make the price of a U.S. iPhone astronomically high compared to wages in other countries.
Apple has not yet commented on the tariffs, but the company has been rushing to stock iPhones and plans to rely on imports from India, where tariffs are lower, to offset some of the cost of importing equipment from China.
Apple previously announced an investment of US$500 billion in the United States, but Apple will use the money to manufacture servers for its private cloud computing system, not iPhones. Servers are a product with low demand and not for ordinary customers.
During Trump's first term, Apple built the Mac Pro in Texas, but it largely failed. Apple struggled to find local suppliers, importing parts into Texas caused delays and unexpected expenses, and Apple struggled to find workers with the required skills.
Yesterday, Trump also planned to impose 54% tariffs on China, but today, he increased the tariffs by 50%. Starting tomorrow, goods imported from China will be subject to a 104% tariff.