Apple is back in Trump's crosshairs over where iPhones are made
Published in Business News
Apple Chief Executive Tim Cook can’t seem to catch a break.
Last month, Apple appeared to secure a major win when the Trump administration agreed to remove tariffs on certain electronics imported from China following concerns that the prices of smartphones and computers could rise.
But Trump threw Apple another curveball this week when he expressed frustration about the tech giant producing the iPhone in other parts of Asia.
“I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.,” Trump said in a post Friday on the social network Truth Social.
Apple didn’t respond to a request for comment about Trump’s remarks.
The public spat underscores the fine line businesses are trying to walk as they try to navigate Trump’s tariffs. Tech companies in particular have to work with the new administration, while also trying to find ways to offset the costs of potential tariffs.
Trump has pushed for companies to build and manufacture products in the United States as part of an effort to strengthen national and economic security.
But shifting production to the United States would take years and result in price hikes for consumers that are already watching their spending, economists and analysts have said.
“We believe the concept of Apple producing iPhones in the U.S. is a fairy tale that is not feasible,” Wedbush Securities analyst Dan Ives said in a note on Friday about Trump’s remarks.
A representative for the White House did not immediately respond to a request for comment.
Apple makes most of its iPhones in China, but in recent years has expanded production in India, Vietnam and other countries.
In the June quarter, Apple expects to source the majority of iPhones sold in the United States from India, Cook said in Apple’s quarterly earnings call in May. And Foxconn, a Taiwanese electronics contract manufacturer that assembles Apple’s products, is planning to build a $1.5-billion plant in India, the Financial Times reported, citing two anonymous government officials.
Ives said it would take at least five years for Apple to shift production to the U.S. and the prices of iPhones could reach $3,500 if the smartphone was made in America. Depending on the model, the current cost of an iPhone can start from $599 but go over $1,000.
Apple isn’t alone in navigating the potential impact of tariffs. Other U.S. companies including Walmart have said they would raise prices as they face political pressure to eat the costs of tariffs.
Apple is in a tricky spot because if the Cupertino-based company raises the prices of iPhones, consumers could just delay buying new electronics, which would also cut into the company’s profits at a time when it is facing heavy competition from rivals in the burgeoning market for AI.
On top of that, Trump has also criticized companies such as El Segundo toy maker Mattel, which is considering raising prices, and Amazon, which considered showing the cost of tariffs next to some of its products, but didn’t approve the idea.
Cook has previously said that while there’s a popular conception that companies go to China for low labor costs, the reason why Apple depends on China is for the skill of its workforce.
“In the U.S., you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China, you could fill multiple football fields. It’s that vocational expertise that is very deep,” Cook said at the Fortune Global Forum in 2017.
For a time, it seemed that Apple was in Trump’s good graces. The company
has garnered praise from Trump when the smartphone maker announced in February that it planned to invest$500 billion in the United States, hire 20,000 people and open a new manufacturing factory in Texas over the next four years.
Trump’s on-again, off-again tariffs have meant that businesses such as Apple are also facing economic uncertainty.
Last week, the U.S. struck a deal with Chinese officials to roll back most tariffs for 90 days. The U.S. agreed to drop the 145% tax Trump imposed on Chinese goods to 30%.
Apple has been monitoring the potential impact of tariffs. In May, Apple estimated that tariffs could add $900 million to the company’s costs, but that assumed new tariffs weren’t added.
On Friday, Apple’s stock dropped roughly 2% to $195.98 per share after Trump’s announcement.
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