Apple could ditch China’s iPhone factories to dodge 20% ‘trade war’ tariffs
APPLE could move production of iPhone models outside of China in a bid to escape costly gadget tariffs.
It’s that latest manoeuvre in the ongoing US-China trade war – a conflict that risks sending the price of American tech made in China skyrocketing.
Although Apple designs its iPhones in California, a Taiwanese company called Foxconn physically manufactures them.
Foxconn uses a number of factories in China to produce iPhone models, which are then slapped with 20% tariffs when they’re shipped to the USA.
Now Foxconn has revealed it’s able to move production of US iPhone models outside of China.
“We are totally capable of dealing with Apple’s needs to move production lines if they have any,” said Foxconn’s Young-Way Liu, as reported by the .
Liu was speaking during the company’s first-ever investor meeting.
He explained that production could be expanded at factories around the world “according to the needs of our clients”.
Foxconn already has plants at a number of locations, including the USA, India, Brazil, Mexico, Japan, Indonesia, Australia, the Czech Republic, and China.
It’s important to note that Apple hasn’t actually signalled plans to ditch China for production of its iPhone models.
However, Apple CEO Tim Cook showed interest in boosting gadget manufacturing in India during a visit to the country last year.
And Foxconn has been considering expanding its own production plants in India, to reduce its reliance on China.
What is Foxconn?
Here's what you need to know...
- Foxconn (also known as Hon Hai Precision Industry) is a major electronics manufacturing company
- The firm is based in Taiwan, but manufactures gadgets all around the world – including the USA, Australia, China and INdia
- Foxconn is one of the largest employers worldwide, and is the largest private employer in Taiwan
- It makes goods for huge tech companies, most notably Apple – manufacturing products like the iPhone and Apple Watch
- It has also produced the BlackBerry, Amazon Kindle, Nintendo 3DS, PlayStation 4 and Xbox One
- The firm has also been implicated in controversies, most notably a series of employee suicides in 2010
- Since then (and following pressure from its clients), Foxconn has made major improvements to working conditions at its factories
- In 2017, Foxconn recorded a revenue of £118billion
This week saw US President Donald Trump threaten to slap tariffs on Chinese goods not already targeted if its leader boycotts the upcoming G20 summit.
The US President, 72, has threatened to ratchet up the trade war saying that additional tariffs could be imposed immediately.
Trump told he would tax the remaining Chinese goods not currently covered in the dispute if President Xi Jinping did not meet with him a the G20 summit earmarked for the end of June in Japan.
Last month tariffs on $200billion worth of Chinese goods kicked in.
He has also threatened to slap tariffs on a further $300bn worth of goods imported from China.
Import taxes on products from 5,700 categories rose from 10 per cent to 25 per cent.
How did the spiralling US-China trade war start?
The basis for the dispute lies with the US President Donald Trump wanting to “Make America Great Again” and part of that is to redress what he sees as unfair trade deals the US has agreed to in the past.
He wants to bring more production back into the country as a way to protect US jobs, he believes such past agreements have been a rip-off for the US.
During the 2016 election campaign, Trump accused Beijing of “raping” US workers.
The Chinese Premier Xi Jinping is also a leader who is said to not want to be seen to back down with both leaders seeing the honour of their nation at stake.
Words turned to action on July 6, 2018, when both sides levied tariffs on $34bn worth of goods.
This was then increased by $16bn by both sides on August 23, 2018.
The stakes were raised yet again on September 17, 2018, when the US imposed $200bn at a rate of 10 per cent while China was more cautious imposing the same rate but on $60bn.
A ceasefire of sorts was then introduced in December 2018 with the two sides agreeing to start negotiations and tariffs were paused.
But despite numerous rounds of talks no agreement has been reached and the US then said it would raise tariffs on $200bn of China goods to 25 per cent.
On May 13, 2019, China said it would increase tariffs on £46bn ($60bn) of US exports, which caused stock markets to tumble.
We’ve asked Apple for comment and will update this story with any response.
Apple’s next iPhone may have already been leaked, courtesy of some early phone cases.
In other news, the iPhone 11 ‘will charge to 50% in just 30 minutes’ thanks to new ultra-fast plug and cable.
The phone could also be ‘coming in two new colours’ we’ve never seen from Apple before, report claims.
Do you think Apple should start making iPhones outside of China? Let us know in the comments!
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