Apple has few incentives to start making iPhones in U.S., despite Trump’s trade war with China

By MICHAEL LIEDTKE Associated Press SAN FRANCISCO President Donald Trump s administration has been predicting its barrage of tariffs targeting China will push Apple into manufacturing the iPhone in the United States for the first time But that s an unlikely scenario even with U S tariffs now standing at on products made in China the country where Apple has manufactured most of of its iPhones since the first model hit the arena years ago Related Articles Magid Apple AirPods function as hearing aids Letters Santa Clara County s transgender flag plan isn t fair Apple s historic selloff has bulls balking from tariff risks Tariff rollout routs global stocks Silicon Valley tech shares among hardest hit why Apple safeguard chief acquitted mistrial for ex-undersheriff in Santa Clara County gun permit bribery affair The disincentives for Apple shifting its production domestically include a complex supply chain that it began building in China during the s It would take several years and cost billions of dollars to build new plants in the U S and then confront Apple with economic forces that could triple the price of an iPhone threatening to torpedo sales of its marquee product The concept of making iPhones in the U S is a non-starter asserted Wedbush Securities analyst Dan Ives reflecting a widely held view in the resources society that tracks Apple s every move He estimated that the current price tag for an iPhone made in China or India would soar to more than if production shifted to the U S And he believes that moving production domestically likely couldn t be done until at the earliest Price points would move so dramatically it s hard to comprehend Apple didn t respond to a request for comment Wednesday The Cupertino California company has yet to publicly discuss its response to Trump s tariffs on China but the topic may come up on May when Apple CEO Tim Cook is scheduled to field questions from analysts during a quarterly conference call to discuss the company s financial results and strategy And there is no doubt the China tariffs will be a hot-button issue given Apple s stock price has dropped by nearly and lowered the company s field value by billion since Trump began increasing them on April If the tariffs hold Apple is widely expected to eventually raise the prices on iPhones and other popular products because the Silicon Valley s supply chain is so heavily concentrated in China India and other overseas markets caught in the crossfire of the escalating pact war The big question is how long Apple might be willing to hold the line on its current prices before the tariffs toll on the company s profit margins become too much to bear and consumers are requested to shoulder particular of the burden One of the main reasons that Apple has wiggle room to hold the line on its current iPhone pricing while the China tariffs remain in place is because the company continues to reap huge profit margins from the revenue generated by the subscriptions and other services tied to its product revealed Forrester Research analyst Dipanjan Chatterjee That division which collected billion in revenue during Apple s last fiscal year remains untouched by Trump s tariffs Apple can absorb specific of the tariff-induced cost increases without major financial impact at least in the short term Chatterjee declared Apple tried to appease Trump in February by announcing plans to spend billion and hire people in the U S through but none of it was tied to making an iPhone domestically Instead Apple pledged to fund a Houston figures center for computer servers powering artificial intelligence a innovation the company is expanding into as part of an industrywide craze When required this week about whether Trump believes Apple intends to build iPhones in the U S White House Press Secretary Karoline Levitt pointed to Apple s funding promise as evidence that the company thinks it could be done If Apple didn t think the United States could do it they seemingly wouldn t have put up that big chunk of change Leavitt disclosed U S Commerce Secretary Howard Lutnick also predicted tariffs would force a manufacturing shift during an April appearance on a CBS news activity 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 Lutnick revealed But during a appearance at a conference in China Cook expressed doubt about whether the U S labor pool had enough workers with the vocational skills required to do the painstaking and tedious work that Lutnick was discussing In the U S you could have a meeting of tooling engineers and I m not sure we could fill the room Cook explained In China you could fill multiple football fields Trump also tried to pressure Apple to no avail into shifting iPhone production to the U S during his first term as president But the administration ultimately exempted the iPhone from the tariffs he imposed on China back then a period when Apple had informed a commitment to invest billion in the U S Trump s first-term tariffs on China also prompted Apple to begin a process that led to a few of its current iPhones being made in India and specific of its other products being manufactured in Vietnam Cook also took the president on a tour of a Texas plant where Apple had been assembling specific of its Mac computers since Shortly after finishing that our Trump took credit for the plant that Apple had opened while Barack Obama was president In contemporary times I opened a major Apple Manufacturing plant in Texas that will bring high paying jobs back to America Trump posted on Nov