Apple is considering moving as much as 30 percent of its production out of China as the trade war escalates between the United States and China. Right now, Apple products such as the iPhone are assembled in China where the price of labor is lower than that of the United States. The company is currently looking into what the cost would be to move that assembly out of China and into other locations throughout Southeast Asia, where the price of labor is lower.
The Trade War Continues To Heat Up
The United States has been in a heated war with China over trade throughout the Trump Administration. Rising tariffs between goods that are imported and exported between China and the United States have driven up the cost of importing. Retailers have had to search elsewhere for suppliers as the cost of importing to the United States from China becomes astronomical. In the end, consumers have had to pay the price for the changes in imports as the prices of goods that are usually imported from China or manufactured overseas are now being sourced domestically, where prices are higher for things like labor and materials.
The latest news with the trade war is that China has announced that it will impose a 25 percent tariff on United States goods that are made in China. This decision is in response to President Trump’s announcement that there will be tariff increases on goods imported from China. The trade war has been going on for years now.
It started getting particularly worse after the CFO of Huawei, Meng Wanzhou, was arrested in Canada. Her arrest was made on behalf of the United States. The arrest was made over actions that Meng did to violate United States laws a couple of years ago. Tensions were already high between the United States and China to begin with. So her arrest symbolized a greater threat to China. Some of the United States’ biggest companies are being forced to reconsider where they manufacture their products.
Apple Considers Moving Its Production Elsewhere
Companies like Apple are looking to move out of China in response to the trade war. Apple has inquired about moving between 15 and 30 percent of its production out of China. Moving instead into other countries like Mexico or throughout Southeast Asia. A diverse production would be beneficial for Apple as it wouldn’t be keeping all of its eggs in one basket. In poor countries, for example, poor living conditions can impact production later on.
Moving production would end up impacting consumers, but so would staying in China, according to experts. The price of an iPhone can increase by as much as 14 percent. That is, if the company continues to manufacture within China. A move could be costly. But getting away from relying on China to manufacture its goods may be a good move for the company. Apple has not made any official announcements about a potential move.
