Trump's trade advisor slams Apple's China ties — but Wall Street says it can't afford to leave

Business Insider

08-07-2025

The Trump administration is losing patience with Apple 's slow progress in moving operations out of China. However, the iPhone maker looks increasingly stuck in China, according to Wall Street analysts.
On Monday, Trump's trade advisor Peter Navarro ripped into Apple's manufacturing strategy on CNBC, calling it "inconceivable" that Apple hadn't been able to move its factories out of China over the last few years.
"Going back to the first Trump term, Tim Cook has continually asked for more time in order to move his factories out of China," Navarro said. "And my problem with Tim Cook is he never takes the steps to actually do that."
"And with all these new advanced manufacturing techniques and the way things are moving with AI and things like that, it's inconceivable to me that Tim Cook could not produce his iPhones elsewhere around the world and in this country," Navarro added.
Earlier this year, Apple CEO Tim Cook announced plans for a $500 billion investment into US projects over the next four years, including adding 20,000 US jobs, a manufacturing facility in Houston, and increased R&D spending. During Trump's first term, Apple also committed $430 billion in US investments.
As Apple faces mounting pressure from the Trump administration to pivot from China, Wall Street analysts aren't that optimistic that the company can pull it off without incurring serious costs.
First, there are higher labor costs associated with manufacturing domestically. Manufacturing domestically doesn't spare Apple from paying reciprocal tariffs to import sub-assemblies into the country, either. Wamsi Mohan, research analyst at Bank of America, estimates that iPhone costs could increase 25% from labor costs alone, and over 90% after factoring import fees.
If Apple were to increase manufacturing in the US, Mohan believes it would be limited to the final assembly process.
"Moving the entire iPhone supply chain would be a much bigger undertaking and would likely take many years, if even possible," Mohan wrote in an April note.
Erik Woodring, a research analyst at Morgan Stanley, said it would take over two years to build an assembly facility. It would also require over 100,000 employees highly skilled in precise tooling equipment, and the first US-assembled iPhone might not be available until after Trump's term.
One option for Apple to mitigate tariff risk is to source more products from India and Vietnam, which it has been doing ever since the pandemic. But the Trump administration's recent pushback indicates that the government is looking for a firmer commitment to reshoring to the US instead of "friendshoring."
In May, Trump threatened a 25% tariff on iPhone imports. Woodring believes that wouldn't be enough to offset the increased costs of domestic manufacturing.
"The time to market would be too long, and the costs associated with building an iPhone in the US would be too high relative to the incremental cost burden of a 25% tariff," Woodring wrote in a May note.
This puts Apple and Cook in a tough spot, but it's unclear what level of tariffs would tilt the cost-benefit analysis in favor of domestic production.
"Apple's defiance […] risks further tariff escalation (is a 50% tariff enough to shift production to the US?)," Woodring wrote.
Additionally, pulling its factories out of China could be its own key business risk. China has been one of the company's biggest growth engines in the past decade.
While exposure to China leaves Apple vulnerable to regulation from Beijing, moving production away from China could be a blow to Apple's largest market outside of the Americas as well.
"Apple moving production out could irk China too, causing potential subtle retaliation (like slow customs clearance, labor inspections, etc., to make life hard for Apple's remaining China ops)," Mohan wrote in June.
"While Apple is diversifying (targeting ~25% of iPhones made outside China by 2025), China will likely remain indispensable for years — it still has the unrivaled manufacturing scale and skilled labor for complex devices," Mohan added.
No matter how you spin it, Apple's existing business model is deeply entrenched in China. The iPhone maker is in an uncomfortable position, facing steep consequences whether it stays in or leaves China.