Here’s why Apple can’t make an iPhone in the US — no matter what Trump says

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Here’s why Apple can’t make an iPhone in the US — no matter what Trump says

Apple CEO Tim Cook oversaw his company’s deep investment in China. That was an enormously successful strategy for Apple — but now it’s a real problem, argues author Patrick McGee.VCG/VCG via Getty Images

Donald Trump wants

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to make iPhones in America.

There’s no chance that will happen, says Patrick McGee, a journalist who just published a book on Apple’s deep ties to China.

McGee also argues that Apple’s end-around on Trump’s China tariffs — saying that some iPhones and other products are made in India and Vietnam — is misleading.

Donald Trump says that

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, or they’ll face a 25% tariff.

But it doesn’t matter what Trump says:

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are never going to be built in the US.

That’s according to Patrick McGee, a journalist who just published “

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” — a detailed look at all of the money and effort Apple spent over decades to enmesh itself in China.

McGee, who has covered Apple for the Financial Times, explains why this has been enormously helpful to Apple — because it created an ecosystem that lets it make ultra-complicated devices at vast scale. But he argues that it was even more helpful to China — because Apple gave ******** engineers access to valuable technology that has let them build other high-value supply chains.

And that McGee posits, has created both a problem for

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— because he can no longer practically extract the company from China — and for the US — because its adversary is now using American know-how to compete with American companies.

(I asked Apple if it wanted to weigh in on McGee’s book. Via a rep, the company said that “claims in the book are untrue” and “filled with inaccuracies” and that McGee didn’t fact-check the book with Apple.)

I talked to McGee for a recent episode of my

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podcast. In the edited excerpt below, we talk about why he thinks it’s impossible for Apple to move iPhone production to the US. And why McGee thinks that Apple saying it’s moving some production to India and Vietnam, in order to escape some US tariffs on China, is deeply misleading.

Peter Kafka: The Trump administration says it wants Apple to move all of its manufacturing to the US. You and anyone else who knows anything about Apple say that is literally not possible when it comes to the iPhone. Why?

Patrick McGee: We’re lacking so many things. The density of population is one. Lots of people know a factory town [in China] might have 500,000 people just putting together the iPhone. The thing that people don’t understand is they’re not doing that year-round. They’re doing that for three or four months.

And then they’re moving on to another project. So Apple doesn’t bear the cost. It’s using the likes of

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to do manufacturing as a service.

There’s an

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who said it would be like if in the city of Boston, every person dropped what they were doing and just worked on iPhones. And as quotable as that is, that understates the challenge. Because it would like the city of Boston transporting itself to some other place, like Milwaukee, assembling iPhones for a few weeks and then moving on to some other project.

China has this floating population —

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— and that workforce alone is greater than America’s entire labor force. So we’re never going to match them in terms of density of population and, more especially, dynamism of the population.

Let alone that it’s happening at way lower labor rates. Let alone it’s got way better machinery and automation. It’s not a matter of willpower and cost — that seems to be what the MAGA dream is based on. It goes so much beyond this.

We often say Americans don’t want to do these jobs. The ******** don’t want to do these jobs. But there are so many people that would rather be doing that than toiling in the fields for 14 hours a day. We just don’t have a base of labor that would do that.

One of the other arguments you and others make is that China has people, but there’s also just huge infrastructure: a whole series of plants and subplants and subcontractors that all are sort of built around getting Apple the products it needs, at a drop of a hat.

Yeah. In the amount of time that it would take China to build a new factory, we would still be doing the environmental paperwork.

But in

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, the company said that for the next quarter at least, every iPhone they sell in the US is going to come out of India, and most of the other electronics they sell in the US — AirPods, etc — are going to come out of Vietnam.

So what am I missing here? It makes it seem like Apple has gone ahead and figured out how to move this stuff out of China.

Not at all. Think of it like this: If there’s a thousand steps in making an iPhone and the final one is now in India, you’re avoiding tariffs. The final assembly is considered “making it in India.”

Like if I took every step of baking a cake except for putting the icing on or …

Putting it in the box or something.

Honestly, not much is happening in India. That might change in the next five to 10 years, but the idea that there is actual production happening in India is just wrong.

If you buy an iPhone next year, it’ll say “made in India.” I think that’s a near-certainty. But that phone will be no less dependent on the China-centric supply chain than any other iPhone you’ve ever purchased.

On that earnings call, Apple also said that the existing tariffs will cost them $900 million in the next quarter. That may sound like a big number, but Apple makes $100 billion in profit a year, so it’s not. If that was just the only impact from the tariffs, that seems like a pretty solvable problem for Apple: They have to move final assembly to India, and eat some costs, but they could do it.

Yeah, absolutely.

Where I think things are much dicier is that the political ties that Apple has with China are unbreakable. I shouldn’t say political ties — I really mean the business ties. They are not going to leave China anytime soon.

Yet the technological transfer that is engendered by designing cutting-edge products every year and building them in China inherently causes a technology transfer from America to China on a crazy level. And if you think of China as a threat, if you think of them as America’s biggest adversary, it is insane that the world’s greatest company is equipping China with this technological know-how year in, year out.

The

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just reported that Apple is thinking about maybe tacking on some of these additional costs to the next round of iPhones they start selling this fall — passing those costs on to the consumer. Does that sound right to you?

Yes, because the other alternative is that you’re squeezing out more from your suppliers. Some analysts have suggested that, and it’s kind of laughable. Because if there’s anything to squeeze out of the supply chain, you damn well better know that Apple’s already done it. Apple pays its suppliers very slim margins. There are not a bunch of **** cats out there that they can just be squeezing

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#Heres #Apple #iPhone #matter #Trump

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