Designed in US, made in China: Why Apple is stuck in tariff tussle

Every phone comes with a tag which tells you it was designed in California.

Although the sleek square that controls most of our lives was created in the United States, it is most likely to have originated in China, where US taxes have already increased to 245 % on some Chinese goods.

More than 220 million smartphones are sold annually by Apple, and nine in ten of those are made in China, according to the majority of their sales. From the bright windows to the power packages, many of the elements in an Apple goods are made, sourced and assembled into iPhones, iPads or Macbooks in China. The US, Apple’s largest business, receives the majority of its products.

Fortunately for the company, Trump resigned from his taxes last week and immediately protected phones, computers, and some other electronic devices.

But the satisfaction is short-lived.

The president has since suggested that additional tariffs are coming:” Nobody is getting “off the rope,” he wrote on Truth Social while his presidency looked into” electronics and the WHOLE ELECTRONICS SUPPLY CHAIN.”

The global supply chain that Apple has hailed as a power is then a risk.

The US and China, the country’s two biggest economies, are interconnected and Trump’s remarkable tariffs have upended that marriage immediately, leading to an obvious question: who is the more contingent of the two?

One of the world’s most valuable companies has a huge advantage over China by hosting its council lines. It was a calling cards to the West for quality production and has helped drive native technology.

In the 1990s, Apple began selling laptops to third-party vendors in China.

Apple found a crutch in China around 1997, when it was on the verge of bankruptcy as it struggled to compete with rivals. A young Taiwanese economy was opening up to international organizations to improve manufacturing and create more jobs.

Apple made its first product launch in China in 2001, through a Shanghai-based investing company. To produce iPods, iMacs, and later iPhones, it teamed up with Foxconn, a Taiwanese digital manufacturer based in China.

As Beijing began trading with the globe- encouraged by the US no less- Apple grew its footprints in what was becoming the world’s shop.

China was certainly ready to produce the phone at the time. However, supply chain professional Lin Xueping claims that Apple made the right choice and helped them develop into “manufacturing giants.”

He cites the example of Beijing Jingdiao, then a leading supplier of high-speed detail technology, which is used to make advanced parts effectively. The business, which cut acrylic, was not regarded as a machine tool-maker, but it eventually developed cutting glasses and gained the reputation of being” the legend of Apple’s mobile phone floor processing,” according to Mr. Lin.

In Beijing, Apple opened its first store there in 2008, the year the town hosted the Olympics and China’s connection with the West was at an all-time great. This quickly snowballed to 50 shops, with clients queuing out of the entrance.

As Apple’s profit margins increased, so did its Chinese assembly lines, with Foxconn running the nation’s largest phone shop in Zhengzhou, which has since been referred to as “iPhone City.”

Apple became a symbol of cutting-edge American technology for a rapidly expanding China, being basic however original and classy.

Nowadays, most of Apple’s beloved smartphones are manufactured by Foxconn. The world’s largest chip producer, TSMC, produces the sophisticated chips that strength them in Taiwan. Additionally, the manufacturing requires rare earth elements that are used in cameras and sound applications.

Some 150 of Apple’s best 187 manufacturers in 2024 had factories in China, according to an examination by Nikkei Asia.

In an interview last month, Mr. Cook, the CEO of Apple, stated that” there is no source ring in the world that is more important to us than China.”

In Trump’s initial name, Apple secured deductions on the taxes he imposed on China.

However, this time, the Trump administration used an illustration of Apple as an example before reversing levies on some technology. It thinks that rising income does encourage American businesses to produce goods instead.

” The troops of thousands and millions of human beings screwing in small screws to create smartphones- that kind of thing is going to come to America”, Commerce Secretary Howard Lutnick said in an exam earlier this month.

Karoline Leavitt, a press secretary for the White House, reiterated last week that” President Trump has made it clear that America may depend on China to produce important technologies like semiconductors, cards, smartphones, and laptops.”

These businesses are working as hard as they can to inland their production in the United States as soon as possible, according to the president.

But many are cautious of that.

Eli Friedman, who previously served on the company’s scientific advisory board, calls the idea that Apple might relocate its assembly facility to the US “pure fantasy.”

Mr. Friedman claimed that the business has been considering expanding its supply chain to other countries since 2013, when he joined the board, but that the US was never an alternative.

He added that Apple didn’t make much progress over the next generation but “really made an effort” after the pandemic, when China’s tightly-controlled Covid lockdowns hurt manufacturing production.

Vietnam and India have been the most significant new places for assembly. However, of program, the majority of Apple production also takes place in China.

Apple did not respond to the BBC’s issues but its web says its supply chain extends” thousands of businesses and more than 50 nations”.

Any alteration to Apple’s current supply chain would be a major blow to China, which is attempting to resurrect after the pandemic.

Many of the factors that the country wanted to be a manufacturing hub for American companies in the early 2000s band real nowadays- it creates hundreds of thousands of jobs, and gives the country a crucial border in world trade.

According to Jigar Dixit, a supply chain and operations consultant,” Apple sits at the intersection of US-China tensions, and tariffs highlight the cost of that exposure.”

It might explain why China did not respond to Trump’s threats by imposing a 25 % levie on US imports instead. China has also imposed export controls on a range of critical rare earth minerals and magnets it has in stores, dealing a blow to the US.

There is no denying that the US tariffs that are still being levied on other Chinese industries will suffer.

Trump has made it abundantly clear that he will target nations that are part of the Chinese supply chain, not just Beijing, which is currently facing higher tariffs. For instance Vietnam, where Apple has moved AirPods production, was facing 46 % tariffs before Trump hit pause for 90 days, so moving production elsewhere in Asia is not an easy way out.

Asia is where the tens or hundreds of thousands of Foxconn assembly sites could be located, and all of these nations are paying higher tariffs, according to Mr. Friedman.

What does Apple then do?

The company is fighting off stiff competition from Chinese firms as the government pushes for advanced tech manufacturing in a race with the US.

Huawei, Xiaomi, Oppo, and other companies can now use Apple’s mature supply chain, according to Mr. Lin, because” Apple has cultivated China’s electronic manufacturing capabilities.”

Apple lost to Huawei and Vivo last year in the top spot in China’s smartphone market. Chinese people are not spending enough because of a sluggish economy and with ChatGPT banned in China, Apple is also struggling to retain an edge among buyers seeking AI-powered phones. In order to boost sales, it even offered sporadic discounts on iPhones in January.

As the Chinese Communist Party sought to censor political messages that people were sharing, Apple has had to restrict the use of Bluetooth and Airdrop on its devices despite holding President Xi Jinping in increasingly close control. It weathered a crackdown on the tech industry that even touched Alibaba founder and multi-billionaire Jack Ma.

Apple has announced a US investment of$ 500 billion ( £378 billion ), though it might not be enough to acquaint the Trump administration for a while.

More unexpected levies are anticipated as a result of the numerous U-turns and the uncertainty surrounding Trump’s tariffs, which could once again leave the company with little manoeuvring room and even less time.

Mr Dixit says smartphone tariffs will not cripple Apple should they rear their head again, but regardless will add “pressure- both operationally and politically” to a supply chain that cannot be unwound quickly.

According to Mr. Friedman, who made reference to last week’s smartphone exemption,” Clearly the severity of the immediate crisis has been lessened.”

” I really don’t believe that this will allow Apple to relax,” she said.

Additional reporting by Fan Wang