Source: Blog – Alliance for American Manufacturing

Apple CEO Tim Cook looks on behind U.S. President Donald Trump and U.S. Vice President JD Vance after the two were sworn into office at an inauguration ceremony on January 20, 2025 in Washington, DC. | Getty Images

A tariff reprieve won’t help – but it will take far more than tariffs, anyway.

Smartphones, computers and other electronics got an exclusion from the suddenly very high “reciprocal” tariffs on Chinese imports over the weekend. They are still subject to other recently imposed tariffs on China but, according to one industry observer quoted by CBS News, “this took the doomsday scenario off the table” for Big Tech. That’s because most of these companies are deeply reliant on Chinese manufacturing to produce their gadgets.

So no tariffs for high-end electronics companies! Okay. Apple, which has a market capitalization of (quick Google search) $3.09 trillion, will continue to produce its iPhones and watches and tablets in China, and everyone else who chooses to do so will have to reckon with a 145% tariff. How will this help electronics manufacturing reshore?

The answer is it won’t. But spurring that kind of reshoring movement isn’t hinging on tariffs alone anyway. There are other things these industries would need to move the needle on that kind of effort.

If you listen to executives describe why they make their stuff in China, they talk about a deep and varied ecosystem of parts manufacturers that’s always on call, reinforced by a political system that incentivizes regional leaders to build out manufacturing-led economies. What’s more, the manufacturing activity taking place there is self-reinforcing; the iterative practice of making things generates more productive knowhow.

And while these executives don’t always go into the significant state support and intervention that have helped make it attractive to produce there, that’s part of the calculation, too.

There are programs in the United States that are meant to reshore important industries and the ecosystems that build up around them. The CHIPS Act, to use a big example, outlaid a significant sum of federal money not only to reshore production of semiconductor chips – the little computer brains found in all modern electronics – but for their research and development as well. While that’s important, it’s just for semiconductors. And it takes a lot more than just a chip to make a smartphone.

Consider the Moto X, a smartphone made by Motorola Mobility and owned by Google, that for a brief time in 2013 was manufactured in Fort Worth, Texas. Sales were sluggish were sluggish enough that the company couldn’t achieve economies of scale, and the factory folded in a year. It’s also worth pointing out that other examples of companies attempting to reshore – like Long Island electronics manufacturer Orbic – are very singular affairs.

If the goal is really reshore these industries, the conclusion must be that we need a holistic effort to do so.

A holistic effort would look like the United States phasing in high tariffs over a few years to demonstrate to these industries what kind of manufacturing activity the government wants; lowering tariffs on the machine tools and other manufactured goods needed to establish a domestic microelectronics supply chain; and then securing commitments from these major companies – the ones with enough pull to establish an economy of scale, like Apple – to locate their production here.

Far easier said than done, sure. But the goal is reindustrialization, right? Tariffs can be a part of that, but tariffs alone were never the whole program. Not a successful one, anyway.

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