Designed in US, made in China: Why Apple is stuck -2025
Each iPhone features a label stating it was designed in California. Although the sleek device, which plays a central role in many people’s lives, is indeed conceptualized in the United States, its actual production typically takes place far from American shores-most often in China.
This is the country that has been impacted the most by the United States President Donald Trump’s tariffs, which have recently climbed as high as 245% on certain Chinese goods.
Apple produces over 220 million iPhones annually, and estimates suggest that approximately 90% of them are manufactured in China. From the shiny displays to the internal batteries, many of the iPhone’s parts are made, sourced, and assembled there-along with other Apple devices such as iPads and MacBooks.
Once completed, the majority of these products are shipped to the U.S., Apple’s largest consumer market.
Luckily for Apple, Trump made a surprise announcement last week, granting an exemption for smartphones, computers, and various other electronic devices from the heightened tariffs.
However, that relief may be short-term.
President Trump has since indicated that additional tariffs could be forthcoming . Posting on Truth Social, he warned that “NOBODY is getting ‘off the hook,'” as his administration launched an investigation into
“semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN.
” What was once viewed as Apple’s greatest asset-its global supply chain-has now become a potential weakness. The U.S. and China, the two largest economies in the world, have long depended on each other. However, Trump’s sweeping tariffs have abruptly disrupted that dynamic, raising a critical question:
which country relies more on the other?
How a Lifeline Turned Into a Liability
China has reaped significant rewards by becoming the hub for assembling products for one of the world’s most valuable tech giants. This role showcased China’s capability in high-quality manufacturing to the Western world and played a key role in driving domestic technological advancement.
Apple made its initial entry into the Chinese market during the 1990s, beginning by offering its computers through independent retailers.
By approximately 1997, as the company faced intense competition and was on the brink of financial failure, China presented a vital opportunity for revival. The country’s emerging economy was beginning to welcome foreign investment to strengthen its manufacturing sector and generate employment-offering Apple a much-needed path to survival.
Apple didn’t establish a formal presence in China until 2001 when it entered the market through a Shanghai-based trading firm and began manufacturing its products locally. It joined forces with Foxconn, a Taiwanese electronics company with operations in China, to produce iPods initially-followed later by iMacs and eventually iPhones.
As China expanded its global trade relationships-ironically, with strong backing from the U.S.-Apple steadily increased its presence in what was fast becoming the manufacturing center of the world. At the time, China wasn’t yet equipped to produce something as complex as the iPhone. However, Apple selected and nurtured a group of suppliers, helping them evolve into what supply chain expert Lin Xueping calls “manufacturing superstars.
China’s Relationship
One such example is Beijing Jingdiao, which started out as an acrylic-cutting business. Though not originally seen as a machine tool manufacturer, the company advanced to produce high-speed precision equipment for crafting sophisticated parts.
Eventually, it developed glass-cutting technology and, according to Mr. Lin rose to prominence as a key figure in the surface processing of Apple’s mobile phones. In 2008—the same year Beijing hosted the Olympics and China’s relationship with the West reached a high point—Apple opened its first retail store in the capital.
This quickly grew into a chain of 50 locations, frequently attracting crowds of enthusiastic customers.
As Apple’s profits surged, its production operations in China expanded accordingly. Foxconn, its major manufacturing partner, now operates the world’s largest iPhone production facility in Zhengzhou-commonly referred to as “iPhone City.”
For a rapidly developing China, Apple came to represent the pinnacle of cutting-edge Western technology-elegant, innovative, and minimalist.
Today, Foxconn continues to assemble the majority of Apple’s flagship iPhones. The sophisticated chips that power these devices are manufactured in Taiwan by TSMC, the world’s top semiconductor manufacturer. The production process also relies on rare earth elements, which are essential for components such as audio systems and camera technology.
According to a 2024 analysis by Nikkei Asia, 150 of Apple’s top 187 suppliers operated factories in China. China is the most essential part of our global supply chain,” Apple CEO Tim Cook stated in an interview last year.
Tariff Threat: Bold Vision or Unrealistic Goal?
During Donald Trump’s first term, Apple was able to secure exemptions from the tariffs imposed on Chinese imports.
This time around, however, the Trump administration initially targeted Apple to set an example before eventually rolling back some tariffs on electronic goods. The administration argues that imposing high tariffs will push companies to relocate their manufacturing operations to the U.S.
In the future, the millions of people currently tightening tiny screws to assemble iPhones will be doing that work in America,” Commerce Secretary Howard Lutnick stated in an interview earlier this month.
Readmore Trump says Auto industry His Auto Tariffs as the World 2025
“President Trump
White House Press Secretary Karoline Leavitt reinforced that message last week, stating, “President Trump has made it clear that America must not depend on China to produce essential technologies like semiconductors, chips, smartphones, and laptops.”
She added that, under the president’s directive, companies are working quickly to bring their manufacturing back to the U.S. Still, many observers remain doubtful that such a shift can occur on the scale or timeline suggested.
Vietnam and India,
The idea that Apple could shift its assembly operations to the United States is “completely unrealistic,” says Eli Friedman, a former member of the company’s academic advisory board.
Friedman explains that Apple has been discussing the need to diversify its supply chain away from China since at least 2013, the year he joined the board-but the U.S. was never viewed as a viable center for manufacturing.
He notes that while Apple made little headway in diversifying over the following decade, the company began to take the issue more seriously after the pandemic when strict Covid lockdowns in China significantly disrupted production.
The most significant new assembly sites have been in Vietnam and India,” Friedman says. However, the majority of Apple’s assembly activities continue to be based in China.
Apple did not respond to the questions. Nonetheless, its official website states that the company’s supply chain includes “thousands of businesses across more than 50 countries.
Challenges on the Horizon
Any shift away from Apple’s current supply chain setup would be a significant setback for China, especially as the country works to reignite economic growth in the post-pandemic era. Many of the factors that drove China to become a manufacturing center for Western firms in the early 2000s remain relevant today—it continues to produce hundreds ofthousands of jobs and provides China with a strategic advantage in global trade.
U.S.-China
“Apple is right at the center of U.S.-China tensions, and the tariffs underscore the risks that come with that position,” says Jigar Dixit, a consultant specializing in supply chain and operations. This may help explain why China has not capitulated to Trump’s tariff threats. Instead, it has responded with retaliatory tariffs of up to 125% on U.S. goods.
Additionally, China has introduced export restrictions on vital rare earth materials and magnets, serving as countermeasures against the U.S.
Nevertheless, the remaining U.S. tariffs on other Chinese industries are still expected to have a significant impact. The pressure isn’t solely on Beijing. Trump has made it clear that countries linked to China’s supply chain are also in his sights. Vietnam-where Apple shifted some AirPods production-was facing a 46% tariff before Trump delayed the move for 90 days. This highlights that relocating manufacturing elsewhere in Asia isn’t a simple solution.
“All of the viable locations for massive Foxconn-like facilities with tens or even hundreds of thousands of workers are in Asia, and all of them are being hit with higher tariffs,” says Eli Friedman.
So, the question remains-what is Apple’s next move?
Apple is currently facing intense competitionf from Chinese tech companies as the Chinese government ramps up efforts to boost high-tech manufacturing in its ongoing rivalry with the United States.
Mr. Lin explains that, now that Apple has contributed to the development of China’s electronics manufacturing capabilities, firms such as Huawei, Xiaomi, and Oppo are able to leverage the well-established supply chain that Apple helped create.
Apple helped create.
In fact, Apple dropped from its leading position in China’s smartphone market last year, being surpassed by Huawei and Vivo. Additionally, reduced consumer spending, caused by China’s slow economic growth, has put further pressure on Apple’s performance.
And with ChatGPT banned in the country, Apple is struggling to stay competitive in the emerging market for AI-enabled smartphones. In a rare move to drive demand, Apple offered discounts on iPhones this past January.
President Xi Jinping
Operating under the increasingly tight control of President Xi Jinping, Apple has also faced growing restrictions. The company has been forced to limit features like Bluetooth and AirDrop on its devices as Chinese authorities aim to block the spread of politically sensitive content. Apple has also endured the broader regulatory crackdown on tech firms, which has even affected industry giants like Alibaba and its founder Jack Ma.
While Apple has pledged a $500 billion (£378 billion) investment in the U.S., it remains uncertain whether this will be enough to satisfy the Trump administration’s long-term expectations. Given the administration’s past reversals and unpredictability regarding tariffs, additional surprise levies are still possible-potentially leaving Apple with limited flexibility and even less time to respond.
Consultant Jigar Dixit notes that renewed tariffs on smartphones wouldn’t be a fatal blow to Apple, but they would certainly increase “pressure-both operational and political” on a supply chain that isn’t easy to reorganize.
The immediate crisis has certainly subsided,” says Eli Friedman, referring to the temporary exemption for smartphones granted last week.
