Re: I don't see how this would be a problem for Apple
> They are going to make it so it is impossible to get at the data under any circumstances. ... if presented with an iPhone running iOS 10 that includes the changes that make it impossible to Apple to help, the FBI will get the court order and Apple will say "what you are asking is impossible".
And that's where this law kicks in, such a phone would be illegal - it would be illegal for Apple to make it (or import it), illegal to sell it, and if Apple ever turned round and said "impossible" then that's a complete admission that they broke this new law banning unbreakable crypto.
In fact, their current models would be illegal under this law - and that's the problem.
"Anything" with crypto where TPTB can't be given the decrypted data on demand is basically illegal. So Apple must water down their protection to render it insecure - and so must anyone else making or importing anything in the US.
As pointed out, this would render the USA "out of bounds" for pretty much anything technology related. The current "discussions" regarding Privacy Shield would be moot - it would be illegal to provide proper security of any data held in the US even if the government completely backed down and accepted the principle of privacy.
What would happen is that a good chunk of US technology business would be very quickly offshored. There'd be (sticking with Apple for a moment) a "US iPhone" and a "rest of world" iPhone - the RoW version would have security, the US one wouldn't, and the security software would have to be developed outside of the US. A bit like certain encryption tools had to be developed outside the US to avoid their "encryption is a weapon of mass destruction" laws.
Apple, Microsoft, IBM, Cisco, Juniper, and a long long list of US tech companies would very soon be deciding that the rest of the world was a more important market than the domestic US one !