During this month’s earnings call, Apple CEO Tim Cook talked about how most of the iPhones sold in the US are being built in India, which, considering the lower US tariffs on that country, may have protected the popular handset from a price jump here in the US. It sounded, in a way, like, between the Trump Administration giving Apple a pass on current tariffs, the steady shift of manufacturing away from China to India and Vietnam, and the promise to invest $500 billion in US manufacturing for chips and servers, Apple was on the right side of the US vs. the World trade war.
Not so fast. President Donald Trump told reporters on Thursday that he “had a little problem with Tim Cook,” and in fact does not want him to build iPhones in India. According to CNBC, Trump recalled, “I said to him, ‘my friend, I treated you very good. You’re coming here with $500 billion, but now I hear you’re building all over India.’ I don’t want you building in India,” adding later, “…we want you to build here.”
Yep, Trump, it seems, is being insistent on bringing manufacturing of all kinds back to the US and doing so through a combination of exorbitant tariffs (and tariff feints – he put a 90-day pause on China’s 145% tariff) and pressuring US companies to do so.
It’s happening but not the way he wants it
On the eve of Trump’s tariff fusillade, I wrote how building the iPhone in the US doesn’t make sense. Like any tech gadget, the iPhone is composed of hundreds of components, often built around the world. The iPhones are only assembled in China, India, and Vietnam.
In some ways, Apple is bringing iPhone manufacturing back to the US in that some iPhone components may be built in those new factories, and Apple Intelligence, though not a physical product, could live in those servers being built in Houston.
I worry, though, that that won’t satisfy Trump’s binary thinking. He clearly does not understand how technology is built or why it has long been built outside the US. Trump believes, for example, that Apple built the iPhone assembly factories in China. But those are Foxconn facilities, and that company also builds the products for companies like Nintendo and Google.
Trump has no sense or does not care that if, through some miracle, every iPhone component is built in the US and the iPhone is also assembled here, it will be more expensive. There is no efficiency gained by all the components being built here.
Tim Apple is good but is he that good?
What’s more, Apple doesn’t have the expertise. It works with partners who build components to its specifications. Apple is not, for instance, a display manufacturer. It’s typically sourcing the iPhone 16’s Super Retina XDR display from companies like LG. LG and Samsung are currently the leading display panel manufacturers in the world. They have the skills and the scale to supply Apple. Apple can’t suddenly replicate that here in the US.
As I wrote before, whatever factories Apple does build or financially support here will feature cutting-edge automation. So while they will employ thousands, they may not be hiring as many as Trump would’ve hoped.
I asked Apple for comment. Surely, with Trump name-checking Tim Cook, whom Trump considers a “friend,” Apple must have something to say about this. My guess is they won’t respond to me, but Cook, according to Trump, promised to up US production, whatever that means.
It might mean Cook will stick with the plan to build more factories in the US and continue the overseas adjustments of iPhone’s manufacturing pipeline. Trump is unlikely to take direct action against Apple and will instead bask in all the Apple facilities’ groundbreaking ceremonies, even if none of them are for “iPhone factories.”
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lance.ulanoff@futurenet.com (Lance Ulanoff)
