Though iPhone carries the label “Designed in California,” in reality, its production lies in China—now facing steep US tariffs, some as high as 245%.
Apple sells over 220 million units of iPhones annually, and estimates suggest that around 90% are manufactured in China.
From screens to batteries, much of the sourcing, assembly, and production of Apple’s devices—including iPhones, iPads, and MacBooks— takes place there, with most units ultimately shipped to the US, Apple’s largest market.
However, the tech giant received temporary relief last week as President Trump unexpectedly exempted smartphones, computers, and certain electronics from his sweeping tariffs.
But, the reprieve appears short-lived. Trump later warned that more tariffs are on the horizon, declaring on Truth Social, “NOBODY is getting 'off the hook',” as his administration launched an investigation into semiconductors and the entire electronics supply chain.
What was once Apple’s greatest strength— its global supply chain— has now become a liability. As the US and China, the world’s two largest economies, grapple with deepening trade tensions, Trump’s aggressive tariffs have disrupted their interdependence, raising a crucial question: who needs the other more?
How a lifeline became a threat
China received significant benefits from hosting the assembly lines of Apple. Its role in Apple's global production network has served as a symbol of quality manufacturing to the West and has fueled domestic innovation.
Apple's journey in China began in the 1990s through third-party suppliers. Around 1997, at a time when Apple was teetering on the edge of bankruptcy, the company found new life in China’s emerging, open-door economy, which was actively welcoming foreign firms to spur job creation and industrial growth.
Apple formally entered China in 2001 through a Shanghai-based trading partner and began manufacturing with Foxconn, a Taiwanese electronics giant with operations in China. Starting with iPods and iMacs, the partnership eventually expanded to include iPhones—products that would come to define the brand.
As Beijing embraced global trade, often with US encouragement, Apple rapidly expanded its footprint, helping China earn its reputation as the "world’s factory." At the time, China lacked the infrastructure to produce high-end devices like the iPhone, but Apple nurtured a local network of suppliers into global leaders.
Supply chain expert Lin Xueping highlights how Apple helped transform companies like Beijing Jingdiao, which went from cutting acrylic to developing precision machines capable of shaping smartphone glass—becoming, as Lin puts it, “the star of Apple’s mobile phone surface processing.”
Apple opened its first retail store in Beijing in 2008, the same year China hosted the Olympics. With US–China relations at a high, the brand quickly grew to 50 locations across the country, attracting massive customer interest.
Apple’s deepening roots in China mirrored its soaring profit margins. Foxconn’s Zhengzhou factory, dubbed "iPhone City," became the world's largest iPhone production site. Today, most iPhones are still made there, with advanced chips supplied by Taiwan’s TSMC and key rare earth materials sourced within the region.
By 2024, 150 of Apple’s top 187 suppliers had factories in China, according to Nikkei Asia. "There's no supply chain in the world that's more critical to us than China," Apple CEO Tim Cook said in an interview last year.
The tariff threat- fantasy or ambition?
During Donald Trump’s first term, Apple managed to secure exemptions from tariffs imposed on Chinese imports. But this time, the Trump administration has taken a tougher stance— initially targeting Apple before partially rolling back tariffs on some electronics. The strategy: use the threat of steep taxes to push companies to manufacture in the US.
“The army of millions and millions of human beings screwing in little screws to make iPhones—that kind of thing is going to come to America,” Commerce Secretary Howard Lutnick said earlier this month.
Echoing the administration’s position, White House Press Secretary Karoline Leavitt said, “President Trump has made it clear America cannot rely on China to manufacture critical technologies such as semiconductors, chips, smartphones, and laptops.” She added that, under Trump’s directive, companies are now “hustling to onshore” production.
But experts remain doubtful. Eli Friedman, a former member of Apple’s academic advisory board, called the idea of moving iPhone assembly to the U.S. “pure fantasy.” He noted that while Apple has spoken about supply chain diversification since 2013, the U.S. was never seriously considered.
According to Friedman, Apple made little headway until the pandemic disrupted production in China, prompting a genuine push to diversify. “The most important new locations for assembly have been Vietnam and India,” he said. “But of course, the majority of Apple assembly still takes place [in China].”
Apple did not respond to the BBC’s inquiries, but its website notes that its supply chain spans "thousands of businesses and more than 50 countries."
Challenges ahead
Any disruption to Apple’s supply chain would deliver a significant blow to China, which is struggling to reignite its economy post-pandemic. Manufacturing for global giants like Apple has long been a key pillar of China’s economic strategy— creating hundreds of thousands of jobs and securing its position in global trade.
“Apple sits at the intersection of US-China tensions, and tariffs highlight the cost of that exposure,” said supply chain consultant Jigar Dixit.
In response to US pressure, China hasn’t backed down. Instead, it has retaliated with tariffs of up to 125% on American imports and imposed export controls on rare earth minerals vital to US tech manufacturing.
While US tariffs continue to affect several Chinese sectors, they now also threaten countries within China’s manufacturing orbit. Vietnam—where Apple has shifted some AirPods production—faced a 46% tariff before Trump paused the measure for 90 days. As Eli Friedman notes, "All conceivable places for huge Foxconn assembly sites are in Asia, and all of these countries are facing higher tariffs.”
Apple now faces a complex challenge. On one side, it's losing ground in China’s competitive smartphone market, with domestic rivals like Huawei, Xiaomi, and Vivo gaining momentum. In 2023, Apple lost its top spot to Huawei and Vivo. A sluggish Chinese economy, rising demand for AI-powered phones (while ChatGPT remains banned), and rare iPhone discounts earlier this year all reflect mounting pressure.
Meanwhile, Apple’s strong integration into China's tech ecosystem is now helping its rivals. “Apple has cultivated China’s electronic manufacturing capabilities, and now Huawei and others can reuse Apple’s mature supply chain,” said analyst Lin Xueping.
Apple has also navigated increasing political scrutiny under President Xi Jinping, including restrictions on Bluetooth and AirDrop, and the broader tech crackdown that affected giants like Alibaba.
The company has announced a $500 billion investment in the US, but it may not be enough to shield it from further action. With policy shifts under Trump marked by reversals and uncertainty, more unexpected tariffs could follow.
“Smartphone tariffs won’t cripple Apple,” said Dixit, “but they add pressure—both operationally and politically—to a supply chain that can't be untangled overnight.”
Friedman agrees: “The immediate crisis may have eased with last week's exemptions—but I don’t think Apple can afford to relax.”
Courtesy: BBC
Bd-Pratidin English/ AM
