This happens when Trump forces Apple to build its iPhone in the US

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One of the campaign demands of Donald Trump was to force manufacturers such as Apple, to build their products in the United States rather than in China. Apple has now recalculated what it would cost the – you want it to know.

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Apple is likely in future to build its iPhones in the US. The reports the Japanese financial news agency Nikkei. Accordingly, the group had its two main manufacturers Foxconn and Pegatron asked to ascribe appropriate action once.

feared import duties of up to 45 percent

Both represent a year ago around 200 million iPhones for Apple. They mostly come from factories in China, where the two companies employ cheap workers. The newly elected US president Donald Trump this is an eyesore. During the campaign, it was one of his central demands, companies like Apple to force them to build their products back into the United States, thereby creating jobs there.

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Now even Trump Apple can not just force it – but it could prove China-made products with high import tariffs, making it uneconomical would for Apple, the smartphone to be built in Asia. Trump called tax rates of up to 45 percent.

Against this background, the Group must now therefore once calculate what it would cost him to relocate production.

Production costs would be doubled

The result is sobering: Pegatron simply refused to create an appropriate calculation. The Chinese knew in advance what would come of it and what competitor Foxconn insiders submitted to follow Apple: Production costs would be doubled.

This is only partly because Foxconn in the US once would have to build new factories. “We are currently building a factory for OLED screens in Japan,” said Foxconn boss Terry Gou Nikkei, “we might just as well build in the United States.” Even in comparison with China higher wages for workers in the US are not the biggest price driver.

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Most expensive it would Foxconn – and thus Apple – that the whole structure had to be changed. A major reason that almost all smart phone manufacturers can produce in China or Southeast Asia, is that there also the basic components arise because there is also the necessary raw materials here.

The problem is the supply

China, for example, the market leader in so-called “rare earths”. These include metals such as yttrium, which is required for screens, or lanthanum, which is in batteries. About 90 percent of world production of this earth comes from China.

Would Apple build its products now in the US, these raw materials or components produced from them would have to be shipped at great expense across the Pacific. This is particularly difficult because most smartphone manufacturers produce according to demand in the short term – that is, in such long supply chains across the Pacific a huge logistical problem.

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The higher price of US production would probably Around the retail Apple – say that anyway expensive iPhones would be even more costly and thus probably unaffordable for many people. Since the well can not be the intention of the new US president, there is a second possibility is that just not the phone itself, but individual components have to be built of the future in the US.

Many states want to bring back jobs from China

The policy is not so much about the money, but rather about the jobs. US studies say that the country about five million jobs have been lost in the industry since the turn of the millennium. Most of them migrated to Asia, particularly China. Foxconn employs about 690,000 workers, a few years ago it was 1.3 million. This is not only Trump but also other heads of state such as India’s Narendra Modi an eyesore that would see these jobs rather in their own country.

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Import tariffs to relocate jobs from China to the US, but a game that also dominates the huge Chinese economy. Prime Minister Xi Jinping warned already in a roundabout way that sales of US cars and smartphones could suffer in China when Trump Create a trade dispute. China has become for companies to its most important market of the future, since the communist economy opens to foreign companies. 1.3 billion new consumers waiting here.

Trump way, is not the first US president who wants to bring back the jobs from China. Barack Obama also has the tried, though less loudly in public. So Apple produces about 2013 and already a part of its MacBooks in Austin, Texas. The Group helped its supplier Foxconn, there to build a factory. The entire production can Apple but for the same reasons as with the iPhone not relocate.