Apple continues to build and export more iPhone units in India as it hopes to move more production out of China.
Worried about what might happen to iPhone production and shipments if the U.S. and China end up in another trade war, Apple has been slowly expanding production of its most important device to other countries such as India and Vietnam. Back in 2018, then President Trump threatened to impose a 10% or 25% tariff on mobile phones built in China which includes the iPhone. To understand why Apple would want to move production out of China, we need to properly explain what a tariff is.What exactly is a tariff?
A tariff is an import tax, nothing more and nothing less. A tariff imposed on any products imported from China is NOT paid by the Chinese. You want to know who pays the tariffs on Chinese imports into the U.S.? American companies do and if these companies want to recoup this amount, they raise prices on their products. So unlike what you might have heard, the bottom line is that if the U.S. imposes tariffs on products from, say, China, U.S. companies and consumers pay.
Foxconn’s iPhone factory in India. | Image credit-Outlook
This doesn’t mean that China’s economy isn’t affected since demand for the product hit with the tariff would be expected to decline due to higher prices. However, since the iPhone is a U.S. company, the only negative impact on China that an iPhone tariff might have would be the loss of jobs if Apple decides to reduce production of the device in the country.
