Technolgy Rules: Apple could end up manufacturing iPhones in another country due to tariffs

Wednesday, December 12, 2018

Apple could end up manufacturing iPhones in another country due to tariffs

According to a new report from Bloomberg, Apple is thinking about multiple scenarios when it comes to tariffs and iPhone production. Right now, iPhones are not affected directly by the trade war between China and the U.S.

But if U.S. President Donald Trump decides to raise tariffs on smartphones, it could be a big deal for the company. Apple manufactures most of its iPhones in China right now, and works with Foxconn for the final assembly of those devices.

In some countries with high tariffs, Apple has worked with suppliers outside of China. For instance, Taiwanese manufacturer Wistron has built an assembly facility in Bengaluru, India. At first, the plan was to manufacture iPhone SE devices in India.

Similarly, Foxconn opened a facility in Brazil back in 2011. But results have been disappointing as devices were still much more expensive in Brazil than in the U.S.

But the U.S. is such a key market for Apple that tariffs on U.S. imports could have significant consequences. According to Bloomberg, Apple would keep the same supply chain even if the U.S. decides on a 10 percent tariff on smartphones. If might move production away from China with a 25 percent tariff.

It’s unclear if all production would move to another country or just production for the U.S. But nothing is changing for now. It’s just executives playing a little game of “what if.”