Why is it harder to bring back high-tech manufacturing in the US than you think?
“Millions of people slowly traverse small screws to make an iPhone. Something like this will come to America.”
It was U.S. Secretary of Commerce Howard Lutnick Pitched in April Due to the Trump administration’s “liberation day” tariff The most radical shift With the first US trade policy since the 1930s.
The administration uses a lot of rationale for tariffs, but what appears to be the most animated president is the desire to bring manufacturing back to the United States for the past decades. Many industries, including Tech, shipped the majority of their overseas production, where wages are lower, skilled workers are easier and suppliers are richer.
But it reverses the current situation for companies like Apple. Much more complicated than Trumpif that’s absolutely possible. Behind the finished smartphone is difficult to replace, especially as the chain of Asian suppliers and assemblers is expanded.
Trump’s wrecking ball to global trade has already proven too fast and disruptive, and because companies like Apple don’t encourage the US to move quickly to the US instead, Washington needs a more targeted, more systematic, and more stable strategy, if not decades, studying trade and global supply.
“There’s no single industrial policy tool that does this on its own. We need an entire ecosystem,” says Marc Fasteau, co-author of the book. US Industrial Policy: Win the competition for good work and high value industries.
How did that happen?
Over the past decades, manufacturing has steadily declined as a share of US GDP, falling from around 25% in the 1950s to 10% today. Meanwhile, in Asian manufacturing powers such as China, Japan and South Korea, this proportion has increased by more than 20%.
In particular, China has acquired much of the world’s manufacturing industry thanks to its skilled labor and a large pool of supply chains that are deeply integrated. Based on Chinese factories, there are countless industries, including large amounts of money, household goods, household electronics, and even bespoke products.
“There’s a deep ecosystem of hundreds, if not thousands, of suppliers and sub-suppliers. You have amazing logistics in the country and through ports to other parts of the world,” says Dexter Roberts, a senior non-resident fellow at the US think tank Atlantic Council.
Also, China’s favourites, Dan Wang, a researcher at the Hoover facility, points out that China has more manufacturing workers (105 million) than the United States (105 million). moreover, China has installed more than half of the world’s industrial robots Compared to the US share of just 7%.
“We can break down weeks of adjustment time to tell all our suppliers that we need to be in the office tomorrow at 8am,” says Wang, who is also the author of the upcoming book. Breakneck: China’s quest to design the future.
25% / 10%
US manufacturing as a share of GDP in the 1950s and today
The most popular image made in China is a complex like the iPhone City, a 5.6 million square metre campus where 300,000 workers assemble most of Apple’s smartphones. But the story is becoming more and more obsolete.
China is more than just an offshore hub. Thanks to a large investment, it has taken the lead from the US in several key technologies. Electric car and battery. “The US is in this very strange position to engage in technical catch-ups with its low-wage competitors,” Wang says.
Some final assemblies for us are big technology that is “China and one“The strategy, which started rallies in Vietnam, India, Mexico and other destinations, began under the first Trump administration and accelerated during Covid.
If China continues to be targeted with stricter tariffs than other countries, that shift could accelerate. For example, Apple is suddenly switched Since Trump took office, he has sourced more than half of US-bound iPhones from India.
As Apple shows, the obvious incentive for businesses is to create separate supply chains for different markets. Regarding Apple, Yuqing Xing, and Yuqing Xing of the National Institute of Policy Studies in Tokyo, China says that it can remain a major supplier of iPhones for the non-US market, but India supplies the US and Indian markets. Meanwhile, Vietnam will assemble other Apple products, such as Mac laptops.
Still, even if the final assembly moves to Vietnam and India, the components have to come from somewhere. And it may be suitable for Beijing as China controls many industries that produce those components. Still, “China isn’t too sad to see this low-value manufacturing leave,” says Roberts, who says Chinese officials are instead encouraging domestic production of high-value items such as semiconductors and batteries.
Estimated price for US-made iPhones: $3,500
105 million/13 million: Number of manufacturing workers in China and the US
$500 Billion: Apple has pledged US investment over the next four years
300,000: Number of workers in iPhone City in China
However, there is also a risk from the US side. Trump is not a fan of Apple’s transition to India, threatening tariffs on iPhones not made in the US “The one sold in the United States (Apple’s iPhone) is scheduled to be manufactured and built in the US, not in India or elsewhere,” Trump posted on social media. Late May.
The US still makes a lot of stuff, many of which are high-end. Aircraft engines, chip making tools, and industrial machinery are just a few of the manufactured goods still produced and exported from the US
a 145% tariff on Chinese productsor even one of the 54% levels Trump originally proposed on April 2 would have wiped out US-China trade. Everything offered from China for US manufacturing will soon be affordable. Finished products from countries such as Japan and Vietnam can be imported at a lower tax rate, whether they rely on Chinese components or obscured US-made products at prices.
Initially, after causing chaos in the financial markets, Trump betrayed many of his original tariff plans. At the time this article was published, the US had a 10% tariff on imports from most countries, a 30% tariff on imports from China, and a 25% tariff on goods deemed important to national security, such as steel and auto parts. Some final products, such as smartphones and laptops, are exempt from import tax.
“There’s no single industrial policy tool to do this on its own. We need an entire ecosystem.”
Mark Fastow, co-authors, US Industrial Policy
Of course, the Trump administration could always decide to hike the tariffs again later. Alternatively, as some federal judges have proposed in recent weeks, courts may break the entire tariff regime as an example of an administrative overview. The reality is that no one knows what will come next, making it difficult for businesses to plan anything.
Is it possible to reuse it?
Trade contracts from a legal standpoint are clearer than proper trade agreements that take months to negotiate. Because they are legally unbinding, trade transactions are not enforceable, and the Trump administration is not bound by its own promises. Therefore, in the short term, many companies are wary of pledging to invest heavily in their US factories. It’s expensive and takes years to build.
Still, even without tariffs, a resume is “a fool’s business,” says Roberts. If you bring something like an iPhone back to the US, it will be prohibitively expensive. In an April report, Dan Ives of Wedbush Securities Analyst estimated that a full production of iPhones in the US would triple the price from $1,000 to $3,500.
The Trump administration may have tried to do something too fast. “You want to start with a small tariff to show you that you’re serious, and a schedule that will bolster that US manufacturers will track their development capabilities to scale things like this,” says Fasteau.
From the start, the tech company tried to curry favor with the Trump administration to influence his policies. It is unknown how much of that courtship is a product of the trade war and what it may achieve. In mid-February, in anticipation of the future import taxes, Apple pledged to invest $500 billion in the US over the next four years, bringing it to suppliers Foxconn and Wistron. Then in early March, Taiwanese semiconductor manufacturers, one of the world’s leading chipmakers, pledged to invest another $100 billion in its Arizona plant.
What can we do if Trump’s tariffs, no matter what form it takes, are not the best way to encourage US manufacturing?
Fasteau believes the answer is a greater investment in automation. He says the US is significantly underinvested in robotics compared to other manufacturing hubs such as China and Germany. “Without investment in robotics, I don’t think large manufacturing is economically viable in the US,” Fasteau said.
But perhaps most importantly, we need to decide what kind of manufacturing the US actually wants to produce. The answer is probably not a US-based iPhone factory, despite what Lutnick is saying.
“If US policymakers really want to manufacture iPhones in the US, they should visit China,” says Xing. “They should see how much workers are paid and what their working conditions are, and report them.
This article was published in June/July 2025: Asia issue luck It comes with the headline “US Tech is making manufacturing a comeback more difficult than you think.”
This story was originally introduced Fortune.com