For decades, American tech companies have built and assembled their devices in emerging markets while concentrating their domestic efforts on product design and software development — because, according to CNN, the profit margins are much higher than for knocking together phones and computers in factories.
President Donald Trump aims to disrupt that dynamic with tariffs that turn cheap foreign goods into expensive imports to spur domestic manufacturing — including the tech gadgets that define our modern lives.
But it costs much more to make tech products in the U.S. than in places like China, Mexico and even Canada. Here’s what you need to know.
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Labor: The Cost of Human Capital in Manufacturing
Many factors contribute to the high cost of making tech products in America compared to lower-cost manufacturing countries — but none is more consequential than the cost of labor.
According to Trading Economics, the average manufacturing wage in the United States is $28.80 an hour.
According to Trading Economics, the average manufacturing wage in Canada is the equivalent of $22.56 an hour.
According to the Apollo Academy, the average Chinese manufacturing employee makes 20% of what an American makes doing the same job, which works out to $5.76 an hour.
According to North American Production Sharing, the average manufacturing wage in Mexico is $4.50 an hour.
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The Many Other Variables of Global Tech Production
Labor is the biggest factor, but not the only one by a long shot. It’s challenging to say definitively what tech products would cost if they were made in one country or another because of variables like:
The type of tech products — different countries are much better at making some kinds of devices cost-effectively than others.
Proximity to the destination country. For example, according to logistics and supply chain firm Visigistics, it costs $5,000 to ship a 53-foot container from China to Los Angeles, but only $600 from Tijuana, Mexico.
Energy costs.
Institutional knowledge. For example, Molson Hart, founder and CEO of consumer products company Viahart and legal tech company Edison, writes that Taiwan dominates the world’s semiconductor chips market because no other country has been able to compete at making these crucial tech components better, faster or cheaper, much less all three.
Manufacturing infrastructure.
Automation.
Governmental regulations.
So, What’s the Cost of Outsourced Tech Compared To That Made in the USA?
The decades-long trend of outsourcing American tech manufacturing has been so near-total that there’s very little U.S. tech production left to compare to places like China.
One of the last exhaustive analyses came from PCMag in 2023, which found that the tiny remaining number of domestic tech manufacturers dealt mostly in high-end, high-quality, high-performance and high-cost consumer electronics, audio equipment, PCs and e-bikes designed for ultra-luxury consumers — and even most of those contain many foreign components.
Therefore, the only real comparison can be hypothetical, so why not hypothesize using the most familiar and iconic American-designed, Chinese-built gadget in the world, the iPhone?
According to CNBC, analysts believe labor costs alone would push up the price of an American-made iPhone 16 Pro by 25% from $1,199 to $1,500. When including the myriad other factors, the price per phone could triple to $3,500 as Apple would have to spend three years and $30 billion re-shoring just 10% of its supply chain to the U.S.
A comprehensive report from Mexican manufacturer Novalink determined that “it is cheaper to manufacture in Mexico than in China” because of the dramatic savings in shipping, labor, currency exchange rates, energy costs and the cost of warehousing and factory rentals. However, China has vast, purpose-built infrastructure that Mexico does not and immediate proximity to the supply chains that iPhone production depends on. In the end, a Mexico-built iPhone would probably be comparable or slightly more expensive than those currently made in China.
If Apple moved to Canada, it would face all of the disadvantages of being made in America, but with slightly cheaper labor costs.
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This article originally appeared on GOBankingRates.com: Here’s How Much Tech Products Made in the US Cost Compared To Mexico, Canada and China
