California plans to Sue the US government over the trade policy differences behind Apple's tariffs

Recently, California in the United States is considering suing the US government because it plans to impose tariffs on iphones. The California side claims that this move seriously harms the interests of local enterprises. This incident reflects the internal trade policy differences within the United States and is worthy of in-depth analysis.

Trump threatened to impose a 25% tariff on non-US-made Apple iphones. On the surface, this was a challenge to Apple's production layout, but in fact, it had deeper strategic considerations. Since taking office in 2017, Trump has always held high the banner of "America First", and the core of his trade policy is to try to promote the return of manufacturing through various means and restore the glory of American manufacturing. During the 2024 presidential campaign, he reaffirmed this commitment and on May 26 this year, he announced through social media that if elected, he would immediately impose a 25% tariff on non-US-made iphones, attempting to force Apple to return its supply chain to its home country.

However, this policy has been strongly resisted by California. California Attorney General Rob Bonta responded promptly, saying that Trump's tariff threats violated the trade regulatory powers granted by the Constitution. The California government has joined forces with 12 technology companies including Apple, Google and Intel to form a "Free Trade Alliance" and plans to file a lawsuit in the federal court within 10 days. From a legal perspective, California questioned the legality of Trump's tariff policy, citing the International Emergency Economic Powers Act, stating that the president has no right to unilaterally impose tariffs in non-emergency situations. Meanwhile, the Constitution clearly grants Congress the power to "regulate international business", and Trump's move is suspected of overstepping his executive authority.

Analyzed from an economic perspective, California's boycott also has sufficient reasons. As a global technology giant, Apple's supply chain employs over 470,000 people in California and is an important pillar of local employment. Once the tariffs are implemented, Apple is highly likely to shift costs in order to maintain profits, which will directly lead to a large number of jobs being at risk of being cut. According to the economic model of Stanford University, it is estimated that 10% of jobs will be affected. Moreover, 73% of the hardware enterprises in Silicon Valley rely on Chinese contract manufacturers. Tariffs may lead to 15% to 20% of these enterprises moving to Mexico or Southeast Asia. This is undoubtedly a huge blow to California's $1.2 trillion technology and economic circle.

Looking at Apple again, if Trump's tariff policy is eventually implemented, Apple will face a difficult choice. Currently, 52% of Apple's global revenue comes from iphones, with non-US production accounting for as high as 95%, mainly concentrated in China, India and Vietnam. If the tariffs are implemented, taking the iPhone 15 Pro as an example, the cost will increase significantly and the profit margin will be compressed from 52% to 40%. To address this situation, Apple may take a series of measures, such as accelerating the transfer of production capacity from China to India, Mexico and Southeast Asia, promoting modular design and automation to reduce reliance on manual labor, and lowering the risk of a single supplier to achieve supplier diversification. However, these measures are not achieved overnight. Relocating a mature iPhone production line requires a one-time investment of 200 to 300 million US dollars. The production cycle of the new base takes 8 to 12 months. Moreover, the yield rate of the Indian factory is 10% to 15% lower than that of China. The weak infrastructure in Southeast Asia leads to rising logistics costs and other issues, all of which will pose huge challenges to Apple.

The current conflict between California and the US government is just a microcosm of the internal differences in trade policies within the United States. For a long time, there have been huge differences in the demands for trade policies among different regions and industries in the United States. In regions where traditional manufacturing industries are concentrated, there may be a greater tendency towards trade protectionism, hoping to protect local industries through means such as tariffs. While regions like California, which have a developed technology industry, rely more on the global supply chain and advocate free trade. This kind of divergence is not only reflected among regions, but also among different political factions and interest groups, making the formulation and implementation of US trade policies full of uncertainties.

The incident where California considered suing the US government for opposing the imposition of tariffs on iphones has revealed a tip of the iceberg of the internal trade policy differences within the United States. This incident not only concerns the future development of Apple and the rise and fall of California's technology industry, but also will have a profound impact on the global trade pattern and the supply chain of the technology industry.