Apple's most expensive computer will be US-made after tariff exemption

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Apple's top-of-the-line computer will be assembled in Texas, the company announced Monday, a manufacturing decision that got caught up in the trade war with China.

The Lone Star State can thank new tariff exemptions for Apple's move. President Donald Trump has been pushing Apple, which makes the vast majority of its products in China, to build its products in the U.S. "Apple will not be given Tariff waiver, or relief, for Mac Pro parts that are made in China. Make them in the USA, no Tariffs!" he tweeted in July.

Over the weekend, the administration exempted certain Chinese-made components used in the Mac Pro from tariffs. In a statement, Apple CEO Tim Cook thanked the administration for the exemption, which allow the company to assemble the computer inside the U.S.

"We believe deeply in the power of American innovation," Cook said in the statement. "That's why every Apple product is designed and engineered in the U.S., and made up of parts from 36 states, supporting 450,000 jobs with U.S. suppliers, and we're going to continue growing here."

The news is the latest twist in Apple's trade war saga that has seen the company's stock price fluctuate wildly with President Trump's tweets about his negotiations with China. Many of Apple's products, including its iPhone, are expected to see new restrictions this December, unless a deal with China is announced.

While many of the components in the Mac Pro still come from China, the move to the U.S. could be a public relations win for the president.

Still, the Mac Pro is a niche product compared to the iPhone, iPad, laptops and watches. The lowest end Mac Pro starts at around $6,000 and the high-end versions, with 28-core processors, could run upwards of $35,000, about the price of a Tesla Model 3 electric car. That puts the computer far outside the price range of most consumers, making it a tool mostly for businesses that require vast computing power.

The previous version of the Mac Pro, which launched six years ago and was recently discontinued, was built in the same Flextronics plant in Austin, Texas. That model, a small black cylinder, ran into production problems, some of which Apple attributed to the device's thermal design.

The news Monday doesn't signal the beginning of a broader shift to U.S. manufacturing for Apple. Labor in China is still significantly cheaper, and China has built infrastructure to service big U.S. companies. But for extremely expensive, niche products like the Mac Pro, U.S. assembly makes more sense, analysts say. It would be much more difficult to move iPhone assembly to the U.S., analysts say.

Had Apple moved its Mac Pro assembly to China, it might have faced a tariff on the entire computer. Apple will have to pay a 15 percent tariff on its iPhone, for instance, in December. But the special exemption of some components, such as circuit boards, may have changed Apple's calculus. It is also in line with the desires of President Donald Trump, who has the power to make changes to tariffs on a dime and without oversight.

Apple's move to Texas "doesn't represent a shift in the mindset or a shift in momentum towards computer and electronics manufacturing tin the United States," said Scott Paul, president of the Alliance for American Manufacturing. He said U.S. companies still have tax incentives to shift manufacturing overseas, and China's lax environmental and labor rights laws keep costs low. "Over the longer term we're going to need much broader policy shifts to keep American high tech manufacturing jobs here," he said.

Chad Bown, an economist at the Peterson Institute of International Economics, a nonprofit think tank, said special treatment for some companies like Apple could hurt other U.S. outfits, allowing the White House to anoint winners and losers. The Trump administration has "turned this into an unfair playing field, where it's all about who you know," he said. "That's a big difference from how the U.S. has historically conducted its trade policy," he said.

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