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Apple makes and sells over 220 million iPhones each year. Nearly all are assembled in China. But new U.S. tariffs—some as high as 245%—are changing that long-standing strategy. Though the Trump administration recently excluded smartphones and computers from the latest round of tariffs, the future remains uncertain.

Former President Donald Trump made it clear: more tariffs could come. In a post on Truth Social, he warned that “NOBODY is getting ‘off the hook’.” His administration is now reviewing the entire electronics and semiconductor supply chain, placing Apple in the spotlight.

Apple’s Global Supply Chain Hinges on China

Most Apple devices—iPhones, iPads, and MacBooks—are made in China and shipped to its largest market: the United States. Experts estimate that 90% of Apple’s devices are produced there.

Foxconn, Apple’s key manufacturing partner, runs the world’s largest iPhone factory in Zhengzhou, often called “iPhone City.” Taiwan’s TSMC supplies chips. Other Chinese firms manufacture batteries, screens, and camera parts—often using rare earth materials critical for electronics.

According to research from Nikkei Asia, 150 of Apple’s 187 main suppliers had Chinese factories in 2024. Apple CEO Tim Cook even stated: “No supply chain matters more to us than China.”

A Strategic Relationship Born in the 1990s

Apple first entered China in the 1990s, selling computers through local partners. As the company struggled financially in the late 1990s, China’s growing manufacturing industry offered a lifeline.

In 2001, Apple set up formal operations in Shanghai and partnered with Foxconn to produce iPods, iMacs, and later, iPhones.

As China opened to foreign investment, Apple helped local suppliers grow. One such company, Beijing Jingdiao, evolved from shaping plastic to mastering iPhone glass surfaces. Apple played a major role in training and scaling these manufacturers.

In 2008, Apple opened its first Chinese retail store. Strong U.S.–China relations led to over 50 more locations and booming demand.

Apple became a symbol of Western tech excellence in a modern China.

Rising Tariffs and U.S. Push to Reshore Jobs

In Trump’s first term, Apple won tariff exemptions. Now, however, the administration is using Apple as an example while pressuring firms to bring manufacturing back to America.

“Millions of workers tightening screws on iPhones—that kind of work will come to America,” said Commerce Secretary Howard Lutnick.

White House Press Secretary Karoline Leavitt added: “America must not depend on China for essential technology like chips and smartphones.” The push for reshoring has picked up speed.

But some experts warn that such plans may not be realistic.

Eli Friedman, a former Apple academic board member, calls it “pure fantasy.” He noted Apple considered leaving China in 2013 but found the U.S. ill-equipped for large-scale assembly.

Limited Alternatives: India and Vietnam Can’t Match China

During the COVID-19 pandemic, lockdowns in China disrupted Apple’s production. The company started shifting some operations to Vietnam and India. Still, China remains the heart of Apple’s global output.

Jigar Dixit, a supply chain consultant, says Apple is now paying the price for U.S.–China tensions. “Even moving production to Asia won’t help,” he explains. “Vietnam faces high tariffs too. All major supply bases are in Asia, and none are immune.”

In response, China imposed 125% tariffs on U.S. goods and restricted exports of rare earth elements—essential for electronics. Both countries now face trade risks that affect industries far beyond smartphones.

Growing Competition Inside China

Apple also faces growing pressure from Chinese tech giants. Huawei, Oppo, and Xiaomi—once students of Apple’s supply model—now use it to compete directly.

In 2024, Apple lost market share to Huawei and Vivo in China. Slower economic growth and Apple’s reduced features (such as Airdrop limitations) affected sales. The ChatGPT ban in China also limited Apple’s AI capabilities, putting it at a disadvantage.

Apple even offered rare discounts on iPhones in early 2025 to win back consumers.

Political Risks and Policy Uncertainty

Apple has spent years adapting to China’s strict tech laws, even cutting features like Bluetooth sharing. The company has survived regulatory crackdowns that sidelined other tech leaders in the country.

Though Apple pledged to invest $500 billion in the U.S., Trump’s team remains unconvinced. Constant policy shifts make long-term planning difficult.

Jigar Dixit notes, “New tariffs won’t destroy Apple, but they’ll increase political and operational pressure.”

Friedman adds that while Apple avoided the worst tariffs this time, “the relief won’t last.”