As a US company that relies on overseas manufacturing, Apple must feel like it is stuck between the Wall Street rock and an increasingly tough, tariff-filled hard place.
The company made a move to try to stave off the worst of the US tariff repercussions this week when it announced it would invest an additional $100 billion (€860m) in the US over four years, beefing up its American manufacturing capabilities. That is on top of the $500 billion it already announced in February.
It may be enough to side-step the worst of the tariffs hit - for now. But is it enough to keep the US president happy long term? On the face of it, this is good news for the president and his agenda. An extra $100 billion makes for some good headlines.
Apple chief executive Tim Cook outlined big plans for the company’s $2.5 billion investment in Corning in Kentucky, where displays for its iPhones and Apple Watches are currently made. The plan is eventually to have all glass for the devices made at the facility.
RM Block
There was also a lot he didn’t say. He didn’t specify if this additional investment would lead to any new jobs at Apple itself, with much of the focus instead on its manufacturing partnerships. Though any jobs created as a result of Apple’s extra investment in these companies will go down as a plus for the tech giant.
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Apple has already said it will create 20,000 jobs in the US over the coming four years, as part of the February announcement that saw it commit to producing AI servers in the US. The company has traditionally been more conservative about hiring, and in an environment where tech companies are continuing to trim headcount, it seems wise not to over-promise on that front.
The Apple chief also didn’t commit to any sort of timeline for US-made iPhones, saying only that it would be “elsewhere for a while”. But is anyone really expecting Apple to pack up its manufacturing abroad and shift it to the US to avoid tariffs?
Even if Apple wanted to, there are several reasons why that plan won’t work. Or at least, not on the timeline Trump is seeking.
Like many companies that manufacture at scale, Apple has built up a significant and complex manufacturing operation abroad. Much of that is in China, although the company has been moving some production to India and Vietnam in response to Donald Trump’s tariff plans.
Trying to replicate that operation and its associated supply chains in the US would take time; building up the expertise alone is a huge undertaking. And given the reaction of Wall Street when the matter was raised a few months ago, investors would be unlikely to welcome the plan with open arms.
Even if Apple could avoid tariffs by assembling devices – at greater cost, thanks to higher wages – in the US, some components will need to made overseas and imported anyway, and inevitably be hit by the tariffs along the way. That will inevitably raise costs for American consumers.
According to a note by Bank of America analyst Wamsi Mohan, assembling iPhones in the US would increase costs by about a quarter, and that is before the impact of potential reciprocal tariffs on imported components is taken into account.
Apple may have built its reputation on making “magical” devices, but even the tech giant would find it difficult to master this particular trick.
