Apple has moved the manufacturing of its Mac Pro Desktop computers to Austin, Texas to avoid trade tariffs with China. While the tariffs implemented by President Trump’s administration contributed to the decision to move production, Apple CEO Tim Cook explained that it is part of an investment plan for the United States.
U.S. Battle with International Tariffs
BBC News explained that the U.S. has imposed three rounds of tariffs on Chinese goods last year and one last September that focused on Chinese imports with a 15% duty. So far, the trade war has escalated to the point where the U.S. has imposed tariffs on over $360 billion of Chinese goods, and they, in turn, have done the same on $110 billion of U.S. products.
The five major U.S. industries that are reportedly impacted the most by the tariffs are:
The majority of Apple’s iPhone assembly is performed in Shenzen, China and the majority of its other products are also assembled in China and then exported back to the United States. Suppliers who have locations in China supply some of Apple’s product components including audio chips, batteries, touch screen controllers, and Wi-Fi chips.
Moving Production to the States
The tech giant is making waves as the new Mac Pro is the only major Apple product that will be assembled in the U.S. It has more than twice as many American-made components than earlier models. Some of the parts will still come from China after the company obtained federal exclusion product exclusions, without having to pay the new tariff.
While this change was able to get them under the radar for the new tariffs, it also will support Apple’s manufacturing presence in the United States. CEO Cook said, Apple products are designed and engineered in the United States with parts from 36 states, which supports 450,000 jobs with United States suppliers.
Mac Pros were manufactured at Texas contractor, Flex in previous years and will return there for production. A release from the company said that this is the beginning of a boost to the U.S.economy with plans to invest $350 billion by 2023.
Impact of the Changes
The government plans to raise an existing tariff on select Chinese goods from 25% to 30% on October 1 of this year. China has its own plans of retaliation by adding costs to 3,000 American products by the end of 2019.
Apple’s decision to manufacture nationally may be a model for other businesses to follow as the trade wars continue. It remains to be seen if this move will promote sales. The usual response to tariffs is to increase the product price, but iPhone sales fell 17% in the second quarter and 12% in the third quarter.
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