Why it won't be easy for Apple to solve Donald Trump's "little problem"

Tim Cook seems to have run into a "little problem" with the US President Donald Trump , who wants Apple to expand iPhone manufacturing in America, not India. During a state visit to Qatar, Trump revealed his conversation with the Apple CEO: "I had a little problem with Tim Cook yesterday. He is building all over India. I don't want you building in India."

The President claimed Cook agreed to increase US production, saying, "I told Cook India can take care of themselves, they are doing very well," and as a result, Apple will be "upping their production in the United States." But Trump's pressure didn't stop there.

On Friday morning, he escalated his demands on Truth Social, declaring: "I have long ago informed Tim Cook of Apple that I expect their iPhone 's that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S."

Although, it's unclear whether Cook has actually committed to this shift in strategy, after he had said in the Q2 earnings call that all the iPhones sold in the US will be made in India.

The confrontation represents the latest chapter in a long-running saga of presidential administrations pushing for Apple to manufacture domestically. Trump's first term saw similar pressure, with then-White House press secretary Karoline Leavitt insisting, "He believes we have the labor, we have the workforce, we have the resources to do it." Trump even suggested on his Truth Social network that "This is a great time to move your company into the US, like Apple, and so many others, in record numbers, are doing."

But shifting iPhone manufacturing from Asia to America isn't as simple as a presidential directive. The complex reality of global supply chains, labor markets, and manufacturing capabilities makes Trump's demand extraordinarily difficult to fulfill in the near term.

America's decade-long quest to bring back manufacturing

Trump isn't the first president to push Apple toward domestic manufacturing. In 2011, President Barack Obama asked Steve Jobs during a Silicon Valley dinner, "What would it take to make iPhones in the United States?"

Jobs's response was blunt: "Those jobs aren't coming back."

The late Apple founder explained that the company employed 700,000 factory workers in China because it needed 30,000 engineers on-site to support those operations. "You can't find that many in America to hire," Jobs told Obama, according to Walter Isaacson's biography.

Current CEO Tim Cook echoed this sentiment in 2017, telling Fortune magazine that Apple's reliance on countries like China wasn't primarily about cheap labor.

"The reason is because of the skill and the quantity of skill in one location, and the type of skill," Cook said. "In the US you could have a meeting of tooling engineers, and I'm not sure we could fill the room. In China you could fill multiple football fields."

This skills gap hasn't narrowed significantly in the years since. Manufacturing expertise is developed over decades, not months, and the US has been losing this institutional knowledge for generations as production moved overseas. The specialized tooling required for precision iPhone assembly represents a formidable barrier to entry that tariffs alone cannot overcome. As Priyank Kharge, the former information technology minister of Karnataka in India, observed while successfully wooing Apple to his region: "You need a rich talent pool that's already trained in electronics manufacturing, which takes years to develop."

As Tarun Pathak, Research Director at Counterpoint, explains: "Every government would like to bring manufacturing locally to their country in theory but in practical world it has lot of moving parts. It took almost a decade and a half for Apple to build such a complex and high-quality supply chain."

It's not just about cheap labour, but also speed and scale

A former Apple executive shared a story, more than a decade ago, that illustrates the manufacturing capabilities gap. When a last-minute design change required modifications to the iPhone's screen, a Chinese factory responded with remarkable speed.

Around midnight, a foreman "roused 8,000 workers inside the company's dormitories," the executive recounted. "Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing more than 10,000 iPhones a day."

"The speed and flexibility is breathtaking," the executive told the New York Times, in 2012. "There's no American plant that can match that."

This manufacturing agility isn't simply a matter of labor costs or availability. It reflects a deeply integrated ecosystem where proximity matters tremendously. The Financial Times analysis of Apple's supply chain found that "The close proximity of suppliers and manufacturers is crucial to Apple's productivity."

As Andy Tsay, professor of information systems at Santa Clara University's Leavey Business School, explains: "There are a lot of advantages to co-locating the activities in the supply chain, in terms of speed and quality of communication and innovation in the product and process design." When components must travel across oceans rather than across town, the entire manufacturing process becomes more cumbersome and less responsive to sudden changes.

Matthew Moore, a former Apple manufacturing engineer, put the scale in stark perspective: "What city in America is going to put everything down and build only iPhones? Because there are millions of people employed by the Apple supply chain in China," he told Bloomberg. "Boston is over 500,000 people. The whole city would need to stop everything and start assembling iPhones."


The workforce disconnect

Beyond the physical infrastructure, there's also a mismatch between Trump's manufacturing vision and American workforce preferences.

A 2024 survey by the Cato Institute and YouGov found that while 80% of Americans believe the country would be better off if more people worked in manufacturing, only 25% wanted such jobs for themselves.

The gap between American and Asian workplace expectations also presents challenges. A deeply reported piece on TSMC's new semiconductor plant in Arizona by The Verge found significant cultural differences.

"The American engineers complained of rigid, counterproductive hierarchies at the company; Taiwanese TSMC veterans described their American counterparts as lacking the kind of dedication and obedience they believe to be the foundation of their company's world-leading success," the article reported.

Even with substantial government incentives, similar experiments have failed before. When Motorola tried to manufacture smartphones in Fort Worth, Texas in 2013, the factory closed within a year due to high costs and disappointing sales. The same structural challenges that doomed that effort remain largely unchanged today.

Pathak notes the fundamental challenge: "In the end Americans will end up paying more for everything. Supply chains are all Asia heavy and won't move unless US is giving massive subsidies to dilute disabilities but even then it will take 2-3 years."


Could automation be what solve Trump's quest to make iPhones in the US?

Although, Trump's Commerce Secretary Howard Lutnick , suggests that the people problem could be solved with robots, and that's not him but he says Cook himself has said so. In a CNBC interview, he revealed a conversation with Cook about bringing iPhone manufacturing to America.

"I talked to Tim Cook the other day and said, 'When are you going to bring the iPhone manufacturing here?'" Lutnick said. "He said, 'I need to have the robotic arms to do it at a scale and precision that would allow me to bring it here.'"

Lutnick framed the potential shift as part of what he calls the "AI industrial revolution," suggesting Americans would work as high-paid technicians rather than assembly workers. "Americans are going to work in factories just like this in great high-paying jobs. They're going to be trained as technicians... They're not going to be the ones screwing components in."

But automation presents its own challenges. The iPhone's design, which uses numerous tiny screws rather than glue for assembly, currently makes human assembly more cost-effective than robotic solutions. The technology required for fully automated iPhone assembly at scale doesn't yet exist, and developing it would require significant investment with uncertain returns. Each iPhone contains approximately 74 tiny screws of various types, and automating their precise placement would be a monumental engineering challenge.

The 'Asian' supply chain puzzle
The argument is not just about skilled labor but also about the intricate supply chain ecosystem that has evolved in Asia. An iPhone consists of roughly 2,700 different parts sourced from 187 suppliers across 28 countries, according to Financial Times research. Less than 5% of iPhone components are currently made in the US, including glass casing, the lasers that enable Face ID, and some chips.

China is responsible for manufacturing the majority of remaining components, but most high-tech parts are produced in Taiwan, South Korea, and Japan.

There's also the matter of rare earth elements, which are essential for smartphone production. Components like the iPhone's battery, which uses lanthanum to extend its life, and the screen, which requires dysprosium to enhance colors, rely on materials that China processes in overwhelming quantities.

According to the US Geological Survey, America imports 70% of its rare earth compounds from China, giving Beijing significant leverage in any manufacturing shift. China has already placed export restrictions on some rare earths in response to Trump's tariffs, potentially complicating any US manufacturing plans.


And finally, the cost equation
Dan Ives, global head of technology research at Wedbush Securities, told CNN that US-made iPhones could cost around $3,500, more than triple the current ~$1,000 price tag, due to the necessity of replicating Asia's complex production ecosystem.

"You build that (supply chain) in the US with a fab in West Virginia and New Jersey. They'll be $3,500 iPhones," Ives said. He estimated it would cost Apple approximately $30 billion and three years to relocate just 10% of their supply chain to the US.

While it's clear how the proposed 25% tariffs, if they ever go into effect, would significantly impact iPhone prices for American consumers, the broader economic implications extend far beyond Apple's bottom line. The economic calculus becomes even more challenging when considering the scale of Apple's operations. The company ships more than 230 million iPhones annually, roughly equivalent to producing 438 devices every minute. Building a US manufacturing base capable of matching this output would require not just factories, but entire new industrial ecosystems. As the Motorola example demonstrated, building a factory without the supporting supply chain infrastructure is a recipe for failure.

Morgan Stanley analysts projected "several billions" in costs for Apple to shift even a portion of iPhone production to America, making domestic manufacturing financially prohibitive compared to simply paying new tariffs, and these new tariffs, if remain same as now, would add $900 million to Apple's costs.

India is the only alternative to China for Apple, at least for now

Rather than shifting to the US, and this is what Trump's little problem is, Apple has been methodically building its Indian manufacturing presence for years, beginning with older iPhone models in 2017 and gradually expanding to include the latest versions.

This shift accelerated after COVID-19 disrupted Chinese operations and as US-China tensions grew. Apple now produces its entire iPhone lineup in India, including premium titanium Pro models. The company's commitment to India remains unwavering, with Foxconn recently announcing plans to expand its manufacturing capacity in the country, further solidifying the supply chain infrastructure that took years to develop.

Now, Apple will be manufacturing most of the iPhones that were to be sold in the US this quarter in India.

Apple's Indian strategy is already paying dividends. In early 2025, recognizing the looming threat of Trump's tariffs, the company took extraordinary measures to increase its Indian production. As Reuters reported, Apple chartered cargo flights to ferry 600 tons of iPhones, approximately 1.5 million devices, to the United States from India in an effort to beat the tariff implementation deadline. The company even secured a "green corridor" arrangement at Chennai airport, reducing customs clearance time from 30 hours to just six hours, mirroring a similar arrangement it has in China.

The economic advantages of this approach are significant. While Trump's China tariffs reached 125% (although, now it's been lowered to at least 30%), imports from India faced only a 26% tariff, which has now been paused for 90 days. Bank of America analysts estimate that prior to the tariff announcements, Apple was on pace to produce about 25 million iPhones in India this year, potentially meeting approximately 50% of American demand. Now it's going to serve about 100% of demand from India.

Pathak emphasizes why India remains the logical choice: "India remains the only potential manufacturing destination for any player beyond China as the ecosystem is mushrooming, aided by lower-cost English-speaking skilled labour, world-class software talent, favourable government policies such as PLI, and a huge domestic consumption market."

Despite Trump's public pressure, Indian officials remain confident in Apple's commitment. "There is no change in Apple's investment plans in India," a government source told CNBC-TV18, adding that the company has "assured the Indian government" of its continued commitment.

Rajoo Goel, Secretary General of the Electronic Industries Association of India, characterized Trump's comments as "just a statement" and expressed optimism that the US President "might change his stance," in a discussion with CNBC TV18, after Trump's comments.

The reality check
As Prabhu Ram, Vice President of Industry Research Group, observes: "Apple finds itself once again in the crosshairs of a belligerent 'America First' policy stance, navigating the tightrope between inflationary pressures and absorbing costs. While the tariff see-saw is likely to continue, planting more seeds for U.S. manufacturing, India's role as a critical cog in Apple's global supply chain will only grow stronger."

Counterpoint's Pathak maintains a pragmatic outlook: "We still think these are very initial days and might evolve into something very different. This can go in different directions but we are maintaining our stand that China and India will continue to play a key role in manufacturing operations for Apple."

The reality is that Apple's supply chain decisions are driven by complex business considerations that extend beyond political pressure. For a company that earned approximately $400 in profit margins (about 36%) on each iPhone 16 Pro, dramatically increasing manufacturing costs could devastate its business model.

Whether Apple will navigate these conflicting pressures by attempting some symbolic US manufacturing or doubling down on its India strategy remains to be seen. But the structural challenges that Steve Jobs identified over a decade ago haven't disappeared, making Trump's "little problem" with Apple a bigger manufacturing dilemma than a presidential directive can easily solve.