California Threatens Legal Action Over 25% iPhone Tariffs

California is contemplating legal action against the U.S. government in response to proposed tariffs on Apple iPhones. This development follows a threat made by Donald Trump, who announced on May 23, 2021, that iPhones manufactured overseas and sold in the U.S. would face at least a 25% tariff. This announcement has raised concerns within the tech industry, particularly for Apple, which is headquartered in California.

California's Attorney General, Rob Bonta, has indicated that the state is prepared to sue the federal government to protect local businesses like Apple. Bonta's position reflects California's dedication to defending its economic interests and the jobs associated with companies like Apple. The proposed tariffs could have a significant impact on the pricing of iPhones. Industry experts suggest that if the tariffs are implemented, the cost of an iPhone could rise to 2,300 USD. If Apple were to shift its production entirely to the U.S., the cost could escalate to 3,500 USD, more than tripling the current price.

The logistical challenges of relocating Apple's supply chain are also substantial. Industry insiders estimate that moving just 10% of Apple's supply chain to the U.S. would require approximately 300 million USD and take around three years. A complete relocation could take between five to ten years, highlighting the complexity and cost involved in such a transition.

The potential legal battle between California and the federal government adds another layer of uncertainty to the tech industry. Apple, being one of the largest employers and economic contributors in California, is a critical player in the state's economy. The outcome of this dispute could set a precedent for how states respond to federal policies that impact local businesses, particularly in the context of international trade and tariffs. This situation underscores the delicate balance between federal trade policies and state-level economic interests, with California's potential legal action serving as a test case for future conflicts.