Report: iPhone Suppliers Mull Leaving China Over US Tariffs

Apple has long depended on Chinese factories to build the company's iPhones, but that could change if the US-China trade war escalates.

According to Bloomberg, Apple's manufacturing partners may decide to shift iPhone production away from the country in the event the Trump administration decides to impose tariffs on Chinese-assembled smartphones.

Apple's suppliers will stick with China if that smartphone tariff is 10 percent, Bloomberg said, citing unnamed sources. But if the tariff climbs to 25 percent, suppliers will have to consider moving iPhone production elsewhere.

In September, the Trump administration began imposing a 10 percent duty on certain Chinese imports, including PC components. But so far, fully assembled smartphones and PCs have been exempt from the tariff list.

That may change if the trade tensions escalate. Last month, President Trump briefly threatened to add all Chinese imports coming into the US to the list before he struck a temporary truce with Beijing in the hopes of reaching a trade deal.

The two countries now have until March to come up with an agreement or the US will raise the current tariff rate from 10 percent to 25 percent. Smartphones and PCs will still be exempt, but any flare-up in trade negotiations could provoke Trump to impose tariffs on all Chinese imports.

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For Apple's iPhone suppliers, a move out of China won't be easy. Foxconn, for instance, has built a giant factory in the Chinese city of Zhengzhou that can employ as many as 300,000 people. Nevertheless, Foxconn has reportedly considered building a factory in Vietnam to counter the US-China trade war. Pegatron, another Apple supplier, is also exploring opening factories in Indonesia to avoid the US tariffs.

The report comes after GoPro on Monday said it was moving its US-bound camera production out of China in an attempt to head off the US tariffs.