By Björn Jeffery, SvD Tech Brief. Published in Svenska Dagbladet on 8 April 2025.
Apple is caught in a squeeze as Trump’s trade tariffs hit the tech giant’s manufacturing hard. China has swiftly moved from being Apple’s most important partner — to becoming its Achilles heel.
“Designed in California. Assembled in China.”
If you use an Apple product, it is quite possible that this small phrase is engraved on the back. The symbolism is crystal clear. Apple is an American company, but its manufacturing takes place in other — substantially cheaper — countries. It is a textbook example of how globalisation has functioned and created unimaginable value for the American tech giant.
As Donald Trump’s trade tariffs are about to take effect, Apple’s close ties to China have rapidly become an enormous problem.
That relationship with China was previously Apple CEO Tim Cook’s greatest achievement at the company. He was previously chief operating officer under founder Steve Jobs, and was the person who established both the contacts and the large-scale manufacturing operations in the country.
As the relationship developed, China also grew into an important sales market, now accounting for around 17 percent of Apple’s total revenue. Apple would not be in the position it is today — the world’s most highly valued company — were it not for China and Tim Cook’s careful and pragmatic management of the relationship.
Now that same relationship has become Apple’s greatest challenge.
Equity analyst Dan Ives of Wedbush Securities describes Apple as the tech company that will be hit hardest by the trade tariffs. “The tariff economic Armageddon that Trump has unleashed is a complete disaster for Apple given its massive exposure to manufacturing in China,” Ives writes. A clearer assessment of the situation is hard to find.
That China could come to pose a problem for Apple has been known for some time. The company has therefore diversified among its manufacturing partners, investing heavily in India among other places. Around 15 percent of all iPhones are now manufactured there. A large proportion of those phones were intended to be sold on the Indian market itself, but given that the US tariff against India is 26 percent (compared with 54 percent against China), reports are now emerging that Apple is trying to significantly increase production in India.
Another theoretical option would be to try to produce iPhones in the United States. In February, Trump took credit for Apple having said it would invest 500 billion dollars in the US over a ten-year period. The majority of that investment had, however, already been pledged before Trump won the election. And the commitment is directed towards more advanced and specialised manufacturing — not ordinary phones, which remain the company’s by far most important product.
But even if Apple could move iPhone production to the United States, what would that look like in practice? The Wall Street Journal examined precisely this scenario and concluded that merely assembling the phone — with all components already in place and ready — would cost approximately ten times more to do in the United States than in China. A cost increase from 300 to 3,000 kronor per iPhone.
And if the company were then also required to manufacture every individual component in the US, the costs would quickly become astronomical. Bear in mind, too, that this unrealistic scenario already assumes that the factories would be up and running and the workforce trained and ready. It goes without saying: this is not going to happen any time soon. Perhaps never.
The irony for Apple is that it had prepared for the possibility of China becoming a problem. The thinking at the time was probably more along the lines of geopolitical risk becoming too great, or Chinese domestic interests no longer aligning with Apple’s needs. Now the threat is coming from inside the United States instead.
The trade tariffs cut straight across Apple’s entire strategy. If the company is forced to sell an iPhone with the American tariffs applied, the production cost rises from around 5,500 kronor to roughly 8,500 kronor per phone. The final price to consumers tends to be about double the production cost. How many people would be willing to pay that?
In a heated trade war between two of the world’s largest countries, it is the company that has benefited most from globalisation that also stands to lose most when trade now comes crashing down. Apple is caught between two global superpowers — and it is going to be painful.
