AAPL Apple Inc

By Tripp Mickle and Sarah E. Needleman 

Apple Inc. said it is keeping production of its new Mac Pro in Texas, reversing earlier plans to shift assembly of the computer to China.

The decision follows the Trump administration's move last week to grant tariff exemptions on 10 items Apple imports from China. The exclusions for components, including a power supply and a logic board, cover a period from September of last year to August 2020, and the U.S. will refund tariffs already paid.

The tech giant had earlier tapped Taiwanese contractor Quanta Computer Inc. to assemble the nearly $6,000 desktop computer outside Shanghai. The high-end computer, which was introduced in 2013, had been assembled in Austin, Texas, by contractor Flex Ltd. and was touted as Apple's only Made in USA product.

"We thank the administration for their support enabling this opportunity, " said Tim Cook, Apple's chief executive, in a statement Monday.

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. In August, President Trump said he planned to extend tariffs of 10% to essentially all Chinese imports in December and raise tariffs on items already subject to duties. The 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, according to documents filed with the U.S. Trade Representative. Tariff exemptions were also granted on Apple accessories like the wireless mouse and trackpad, named Magic Mouse 2 and the Magic Trackpad.

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. Former operations employees and current suppliers say they have spent much of the past year evaluating contingency plans for products that are assembled in China, as the company looks to avoid tariffs. Apple had asked suppliers to move as much as a third of production for some devices outside China.

The company said it would begin production of the new Mac Pro soon at the Texas facility, without specifying a date. The new desktop computer will include components designed and made by more than a dozen U.S. companies.

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.

During an earnings call July 30, Mr. Cook told analysts that Apple was seeking exclusions for China-made components so it could continue assembling some Mac Pros in the U.S.

"The vast majority of our products are kind of made everywhere," Mr. Cook said, noting that components came from the U.S., China, Japan and South Korea. "That's the nature of a global supply chain."

Write to Tripp Mickle at Tripp.Mickle@wsj.com and Sarah E. Needleman at sarah.needleman@wsj.com

(END) Dow Jones Newswires

September 23, 2019 13:49 ET (17:49 GMT)

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