[Text by Guancha Observer Network, Zhang Jingjuan] Last week, U.S. President Trump threatened Apple Inc., demanding that the company manufacture iPhones in the United States or face at least a 25% tariff. However, achieving "Made in America" for the iPhone seems quite difficult.

According to a MarketWatch report on May 27, an analysis conducted by Morgan Stanley's U.S. Public Policy team led by Michael Zezas suggests that while Trump may have the legal authority to increase tariffs on foreign-made iPhones, this will not change Apple's overseas production strategy.

As early as during his first presidential campaign in 2016, Trump promised voters that he would make Apple start producing computers and other devices in the United States instead of other countries.

Last week (May 23), after Trump issued a tariff threat, Apple's stock price fell by 3% on Friday. The market's concerns were alleviated by Trump's decision to temporarily refrain from imposing additional tariffs on EU imports, which also led to an increase in Apple's stock price.

The report notes that even assuming no approval issues and having trained labor, it would take at least nine months to set up a medium-sized consumer electronics assembly plant in the U.S.

"Now consider this," the team said, "Apple needs multiple factories and approximately tens of thousands of skilled workers (or robots/humanoid robots) who are proficient in high-tech machining equipment to annually produce more than 65 million iPhones for the U.S. market."

Therefore, this would require several years, without even considering that the cost of manufacturing iPhones in the U.S. might be 75% higher than in China or Southeast Asia.

The report points out that, by comparison, imposing a 25% import tariff on materials worth about $450 for phone manufacturing is equivalent to increasing the cost of each device by $110. If Apple raises prices globally by less than 5%, it can fully offset the impact of the tariff.

The Morgan Stanley team stated that Apple might choose to produce products with lower production volumes, such as AirTags or HomePods, in the U.S. "However, from a broader perspective, even with a 25% tariff, it is unlikely to incentivize Apple to move 30% of its iPhone production to the U.S."

Local time on September 9, 2024, California, USA, the 2024 Apple Autumn Product Launch was held. The iPhone 16 series was unveiled. IC photo

Previously, The New York Times reported that Apple could produce iPhones in the U.S., but analysts believe that in the short term, it is economically unfeasible.

Supply chain experts said moving iPhone production to the U.S. in 2025 would be foolish. Experts noted that young Chinese women have smaller fingers, giving them an advantage when assembling iPhones, as they are more dexterous in installing screws and other miniature parts. Two anonymous sources familiar with the matter revealed that during recent analyses to assess the feasibility of transferring production to the U.S., the company confirmed that it cannot find talent with equivalent precision assembly skills in the U.S.

In addition, China has millions of migrant workers who can work in factories across various locations as Apple's new iPhone production cycles begin. They typically work from summer until production slows down around the Spring Festival, so Apple's suppliers do not need to pay their full-year wages.

The report also mentioned that China has a strong reserve of engineering talent. As early as 2017, Apple CEO Tim Cook said that the number of engineering talents in China could fill multiple football fields, whereas similar talents in the U.S. couldn't even fill a room.

Currently, although Apple has accelerated iPhone production in India, it still assembles most of the complex components of iPhones in China, including screens and facial recognition technology modules. These components undergo a process called "pre-assembly" before being transported to India, where they are finally assembled into a complete iPhone. Therefore, the final product can claim to be assembled in India, but in fact, most of the work is done in China.

Notably, in addition to targeting Apple, Trump also threatened similar companies like Samsung.

Trump previously stated when asked if the tariff would only apply to Apple that "the scope will be broader. Samsung and any other companies producing such products will be included; otherwise, it wouldn't be fair." He added that relevant tax measures would be "appropriately implemented" and ready for execution before the end of June, but provided no further details.

This article is an exclusive contribution by the Guancha Observer Network and unauthorized reproduction is prohibited.

Original source: https://www.toutiao.com/article/7509460715149935138/

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