Even the Chinese phone manufacturers rely on American software (Android), even if Google gives that away.

If China refused to assemble iPhones for Apple, that assembly could easily be shifted somewhere else: the components are mostly not from China and even the machinery used to assemble the iPhones is mostly German. Apple/Foxconn do it in China because it is the best deal ATM, and shift iPhone assembly around as needed easily (eg iPhones are assembled in Brazil, and will be in India to get around tariffs).