How Much Would Donald Trump's American-Made iPhone Actually Cost?
Trump wants to grow US manufacturing jobs by forcing Apple to build its products here.
Image: Michael Vadon/Flickr
Republican presidential candidate Donald Trump's latest idea for how to make America great again? Force Apple to build its products in the US.
Trump, in a Monday speech at Liberty University in Virginia, said he'd "get" Apple to build its "damn computers and things in this country instead of in other countries." Now, Trump didn't specify exactly how he'd get Apple to do such a thing, but his overall thought process is pretty clear: He'd rather American companies build products like the iPhone and Apple TV here in the US, and grow US manufacturing jobs in the process, instead of building them in China, a country he's said is "killing us" and "stealing our jobs."
So how much would an American-made iPhone cost, and what would it take to get one?
"We've kind of gone down this route before," Wayne Lam, principal analyst of telecom electronics at research firm IHS Technology, told me over the phone. (IHS is the research firm that physically breaks apart the iPhone to estimate how much it costs Apple to make. The iPhone 6s Plus, which retails for $749, is estimated to cost Apple $236 to make.) "It would be kind of nutty to ship components halfway around the world [from Asia to the US], adding a layer of complexity to the manufacturing process when everything is much more easily accessible in Asia."
"Can you imagine the governor of Michigan saying, 'I need 1,000 machinists in Detroit by Friday'? Could you do it?"
These components includes displays, memory, and enclosures that are all sourced from Asia, Lam said. (Trump did not specify whether he would force Apple to assemble iPhones in the US, or if he would force Apple to assemble iPhones in the US made of solely American-made parts, which would likely be impossible without upending the current global supply chain for electronics.)
I then called up Kyle Wiens, the CEO of electronics repair specialists iFixit, to get a ballpark estimate of just how much a US-assembled iPhone might cost consumers.
"Building [Apple products] in the US isn't impossible, but a matter of whether or not consumers are willing to pay more for them," iFixit CEO Kyle Wiens told me over the phone. Doing some back-of-the-envelope math, Wiens said that consumers could pay around $50 more for an iPhone that was assembled in the US versus one that was assembled in China.
That's because many Chinese manufacturing employees earn "just above the minimum wage, which at about $270 a month in China is less than a quarter that in America," according to the Economist. That difference has to come from somewhere, and it's not likely to be from Apple's (admittedly large) piggy bank.
"You wouldn't be building everything here overnight," Wiens added, "but if you started slowly and moved 10 percent of your manufacturing to the US each year," pretty soon Apple could have a significant percentage of its products assembled in the US—assuming Tim Cook and co. are OK with higher US assembly wages.
Apple may even have a head start, given that it already assembles the Mac Pro here in the US.
Of course, if Trump is elected president and manages to impose a 45 percent tariff on all imports from China, as he's threatened to do, then that dramatically changes the kinds of calculations that Apple makes when deciding to manufacture its products in that country. If it cost Apple an extra 45 percent to bring fully assembled products into the US, it might then make sense to assemble them locally (as it does in Brazil, which has high import tariffs).
I then asked IHS about its broader thoughts of when politicians like Trump hoot and holler about bringing back manufacturing jobs to the US: Are they merely blowing hot air, or is the US on the cusp of returning to its manufacturing roots?
"We have a world economy, and I think you gotta realize that and deal with that," Dan Panzica, IHS senior principal analyst for outsourced manufacturing and services, told me over the phone.
Panzica, a former director of quality and engineering at Foxconn, recalled an incident around four or five years ago in which Foxconn managed to send 1,000 machinists more than 1,000 miles across China in just a few days without negatively impacting business. "Can you imagine the governor of Michigan saying, 'I need 1,000 machinists in Detroit by Friday'? Could you do it?" he asked.
This isn't the first time a politician has implored Apple to move its manufacturing to the US. According to the New York Times, President Obama asked Steve Jobs in February 2011 why Apple couldn't make the iPhone in the US.
Jobs' response: "Those jobs aren't coming back."