It’s fair to say the trade war sparked by US president Donald Trump has already had huge secondary impacts across the globe, and will continue to do so.
But if Trump thought imposing prohibitive tariffs on China would spark a wave of companies shifting their manufacturing operations back to the US, it is already clear that he is mistaken.
Apple, perhaps the biggest company of all, is seeking to build on its already significant ties to India by moving all production of iPhones bound for the US there from China as soon as next year, the Financial Times reported on Friday.
In essence, the tech giant will shift the making of devices sold in the US away from China in a bid to get around the worst of Trump’s import levies. After all, even though Trump has exempted smartphones and computers from his so-called “reciprocal tariffs”, they would still be subject to a separate 20 per cent levy.
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All told, the company sells about 60 million such devices in the US each year, so this is no small thing.
It also more or less gives the lie to the idea that big business will shift their manufacturing back to the United States in the face of tariffs. Like any big company, Apple is instead looking to shift from one low cost location to another.
This will probably work in Apple’s favour in a number of ways. Not only will it in all likelihood get around the levies on China, it will also help it avoid the political backlash that would inevitably come if Apple was to increase the price of its phones by several hundred dollars to offset the extra charges.
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Even if the jobs are not moving to the US, it is also possible Trump will try to spin the move as a win because it would deal a blow to China, which appears to be the main target of the president’s ire.
As with much of the Trump presidency, the optics of it all will be key. If he thinks he can sell this as a victory for him then everything will be hunky dory. If not, well, we’ve seen this movie many times over the last decade.
