Apple just said it is keeping production of its new Mac Pro in Texas, reversing earlier plans to shift assembly of the computer to China, reports The Wall Street Journal (Sept. 25, 2019). The decision follows the administration’s move last week to grant tariff exemptions on 10 items Apple imports from China. The exclusions for components includes a power supply and a logic board, and the U.S. will refund tariffs already paid.
The tech giant had earlier tapped Taiwanese contractor Quanta Computer to assemble the $6,000 desktop computer outside Shanghai. The high-end computer, which was introduced in 2013, had been assembled in Austin, Texas, and was touted as Apple’s only Made in USA product. Escalating trade tensions over the summer challenged Apple’s plans to make the product in China, where labor and logistics costs are lower than in the U.S. The proposed tariffs could have cut into Apple’s profits or forced it to increase the cost of the Mac Pro.
The parts for which Apple obtained exemptions are critical to the computer’s function. For example, Apple received a tariff waiver on the Mac Pro’s graphics-processing module, which itself incorporates more than 1,600 components and allows images to be rendered on a computer screen. Apple’s decision to reverse course and instead keep the computer’s assembly in Texas is among the most pronounced examples of how tariffs have roiled corporate decision-making.
Apple also said it is on track to fulfill its commitment to invest $350 billion in the U.S. economy by 2023, last year spending more than $60 billion with more than 9,000 domestic suppliers.
Classroom discussion questions:
- Where do you think Apple falls in terms of international operations strategies (see Figure 2.9)?
- What factors did Apple consider in making this decision?