To avoid the fragmentary dispute between China and the U.S, President Donald Trump suggested that Apple ought to move its manufacturing to the United States, this follows reports that Apple’s products could increase in price.
The Trump administration recently started imposing tariffs on most goods from China, until now what has been left off this list was consumer electronics. It could soon change as soon the proposed list of tariffs could now include products from major companies such as Sonos, Fitbit and Apple. Apple announced that tariffs would aggregate to a tax of 25% on products such as the Apple Mac Mini, HomePod, Apple Pencil, and AirPods as well as others that are shipped to the US and that the cost more likely than not could be passed onto customers.
President Trump urged Apple via Twitter to build their new manufacturing plants in the United States in order to avoid these tariffs, Trump even suggested that there could be no tax, what is not completely clear is if the president meant no tax on the tariff or if he proposed a tax incentive should Apple relocate to the United States.
Could Apple Be Relocating to the United States
Currently, Apple does resemble their Mac Pros in the United States, although most Apple products are constructed in China and in the past year the company invested in Corning $1 billion. Corning is the company that manufactures the glass screens for iPhones. According to President Trump, Tim Cook, Apple’s CEO committed to building three manufacturing plants in the US. Apple also would spend hundreds of billions in the future to employ more workers, supply a chain infrastructure and invest in domestic manufacturing. Foxconn, an Apple supplier, also established its headquarters in the US recently, which was ahead of its plans to build a major LCD factory in Wisconsin.
Can Apple Customers Expect Cheaper Products?
Should Apple decide to move to manufacture to the United States, they are guaranteed that they would skip the tariffs, although it is unlikely that its products would be any cheaper. The main reason why China is so attractive when it comes to tech manufacturing is due to the cheaper workforce as well as the plants that manufacture the individual components that are in close proximity to each other.
On the other hand, for Apple it would be a costly affair to move all its manufacturing to the US, there is no doubt that the manufacturing infrastructure move will be costly. Scott Lincicome, a trade lawyer, pointed out on Twitter that it would be more expensive to manufacture iPhone’s in the United States. His comment was citing a report of 2014 that revealed that the cost of iPhone components manufactured in China was about $190 per phone. Should the components be manufactured in the United States, the price massively increases to an estimated $600, and at the time of the report, it would push the price up to around $2,000, which are much higher than what the tariff would increase the price.