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Apple and the Call for U.S. Manufacturing: An Overview
Image Caption: A customer showcases the new green Apple iPhone 13 Pro right after its release at the Apple Store on 5th Avenue in Manhattan, New York City, on March 18, 2022. — Reuters
NEW YORK/WASHINGTON: President Donald Trump has expressed a desire for Apple to produce iPhones in the United States. However, experts caution that this transition could take several years and lead to a dramatic price increase—potentially up to $3,500 for each phone. This represents nearly three times the current retail price.
The central question now is whether American consumers would be willing to pay such a premium for domestically produced phones.
Trump’s push to relocate iPhone manufacturing to the U.S. is fraught with legal and economic obstacles. Experts highlight, for instance, the challenges of automating the assembly process, which includes numerous tiny screws.
On Friday, Trump threatened to impose a 25% tariff on Apple for any iPhones sold in the U.S. that are not manufactured domestically, as part of his administration’s effort to bring jobs back to America. He also indicated that this tariff would apply to Samsung and other smartphone manufacturers, hoping to implement it by the end of June.
“It wouldn’t be fair if we didn’t include all imported smartphones,” Trump stated. He mentioned a prior understanding with Apple CEO Tim Cook regarding manufacturing decisions, specifically noting that while it’s acceptable for Apple to build plants in India, selling phones in the U.S. without tariffs wouldn’t be allowed.
Commerce Secretary Howard Lutnick emphasized last month that the task of “millions of people screwing in small screws to create iPhones” might be automated in the U.S., creating jobs for skilled mechanics and electricians. However, he later noted that Cook indicated the necessary technology for this automation is currently unavailable.
“He mentioned needing robotic arms capable of performing tasks at the scale and precision required for domestic production. The moment such technology is available, we’re ready to move forward,” Lutnick said.
To exert pressure on Apple through tariffs, trade experts suggest the administration might utilize the legal framework established by the International Emergency Economic Powers Act (IEEPA). This law allows the president to impose economic measures in response to emergencies deemed a significant threat to the U.S.
“There’s no explicit legal framework for company-specific tariffs, but the Trump administration may attempt to invoke emergency powers,” said Sally Stewart Liang, a partner at Akin Gump in Washington.
Implementing tariffs exclusively on Apple could provide a competitive edge to other smartphone manufacturers, undermining Trump’s objective of boosting domestic production.
According to experts, Trump views IEEPA as a versatile and potent economic tool because the courts may lack jurisdiction to challenge the president’s actions during a declared emergency.
In a legal case involving 12 states that challenged Trump’s “Liberation Day” tariffs, the court is evaluating whether IEEPA permits such tariffs.
If the Trump administration prevails in this case, “the president will have little trouble justifying tariffs on Apple iPhone imports,” said Tim Meyer, an international law professor at Duke University.
Trump could also categorize iPhones under an existing trade deficit emergency, which has already been used as a basis for other tariffs.
However, moving production back to the U.S. might take a decade and could result in iPhones costing around $3,500 each, according to Dan Ives, an analyst at Wedbush. Currently, Apple’s highest-priced iPhone retails for approximately $1,200.
“We consider the idea of Apple manufacturing iPhones in the U.S. to be a distant fantasy,” Ives remarked.
Even the mere threat of tariffs on iPhones could complicate Apple’s supply chain and financing, leading to higher consumer costs, according to Brett House, an economics professor at Columbia University.
“None of this bodes well for American consumers,” he cautioned.
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