Apple-Alibaba AI deal sparks US backlash: How China ties could derail iPhone AI rollout

Apple’s push to integrate artificial intelligence into iPhones in China is reportedly facing resistance from the Trump administration and US lawmakers. The tech giant’s partnership with Chinese firm Alibaba has triggered national security concerns, reigniting fears over data privacy, censorship, and China’s military edge.

What’s the deal about?

Apple is quietly pursuing a partnership with Alibaba to bring the Chinese company’s AI capabilities to iPhones sold in China. According to The New York Times, Alibaba Chairman Joe Tsai publicly confirmed the deal in February, although Apple has not made any formal announcement.

With Chinese brands like Huawei and Xiaomi rapidly introducing AI-driven features, Apple views this collaboration as essential for staying competitive in a market that reportedly contributes nearly 20 per cent of its global revenue.

However, as per The New York Times, this move has drawn sharp scrutiny in Washington. White House officials and the House Select Committee on China have questioned Apple executives about what user data might be shared with Alibaba, and whether the company is entering into binding agreements with Chinese regulators.

Why is the US concerned?

AI is no longer seen as just a commercial tool — it’s a strategic asset. According to The New York Times, US officials believe AI will play a pivotal role in future military conflicts. They are concerned the Apple-Alibaba deal could help China advance its own AI models, particularly through access to real-world user data.

Lawmakers are also alarmed that working with Alibaba could expose Apple to China’s censorship laws, allowing Beijing to expand the influence of AI chatbots embedded with content controls.

The issue reached a boiling point during a closed-door meeting in March 2025, when Apple executives reportedly failed to adequately answer lawmakers’ questions about the specifics of the deal, The New York Timesreported.

Trump tariffs and trade tensions

Apple’s AI plans unfolded alongside rising trade tensions between the US and China. In April 2025, President Donald Trump announced a steep 145 per cent tariff on Chinese imports, aiming to slow China’s tech advancement and protect domestic industries. China responded with a 125 per cent retaliatory tariff on US goods, escalating fears of another full-scale trade war.

Amid global economic unease, officials from both countries met in Geneva on May 12 and agreed to a 90-day tariff pause. As part of the truce, the US lowered tariffs to 30 per cent, while China reduced its duties to 10 per cent, according to Reuters. While this temporary deal eased short-term pressure, it did little to resolve deeper structural tensions — especially those tied to emerging technologies like AI.

According to The New York Times, Apple is feeling the squeeze. With its supply chain deeply tied to China, the company is facing higher costs, political heat, and increasing difficulty in navigating two divergent regulatory systems. If Apple is forced to walk away from the Alibaba deal, it may lose vital ground to domestic Chinese rivals rapidly scaling their own AI capabilities.

Apple deal fallout risk and industry impact

Analyst Richard Kramer of Arete Research told The New York Timesthat if the Alibaba partnership collapses, Apple could face commercial fallout beyond AI. Alibaba is also a key e-commerce partner, crucial for marketing and selling iPhones across China’s hyper-competitive smartphone market.

Pulling out of the deal could leave Apple both technologically and commercially vulnerable in one of its most important regions.

There’s also a broader implication: US firms enabling Chinese AI companies to access large user bases may inadvertently help China refine its own AI systems. The New York Timesnotes that these systems could later support China’s military, surveillance, or strategic capabilities.

Companies like Baidu, ByteDance, and Alibaba stand to benefit from such indirect AI development, further fueling Washington’s concerns about unchecked tech transfer and the global race for AI dominance.

Apple’s AI ambitions in China have placed it squarely in the middle of an intensifying tech cold war. What’s at stake is not just the company’s future in China, but also US national security and the international balance of power in the age of artificial intelligence.