Trump Threatens Tariffs on Apple
President Trump threatened a new tariff on Friday morning, including a 25% tariff on Apple if they do not move part of their iPhone production to the USA. "I said Tim Cook from Apple a long time ago that I expect your iPhone to be sold in the United States in the United States, in the USA, not in India or in another place", it will be manufactured and built. "If this is not the case, a tariff of at least 25% of Apple must be paid to the USA for your attention for this matter!"
Threats to the European Union
In a subsequent post, Mr. Trump also threatened to impose a 50% tariff on the European Union and "very difficult to cope with" the group of countries. "Our discussions with them do not go anywhere!" The president said. "Therefore, I recommend a 50% tariff to the European Union from June 1, 2025." "There is no tariff if the product is built or manufactured in the USA," he added.
Meeting with Tim Cook
According to an official of the White House, President Trump met in the White House on Wednesday with Apple’s CEO, Tim Cook. The official did not know what was discussed at the meeting. Mr. Trump imposed amazing tariffs in early April, but later announced that he would do it free high-tech products, including Apple’s iPhone, which is mainly produced in China. Nevertheless, tariffs are expected to affect the company’s result. Apple CEO Tim Cook said in a profit call on May 1st that the levels of the US taxes could cost the company 900 million US dollars in the current quarter.
Market Reaction
The Apple shares fell by 2.6% in early trade on Friday, as well as the wider financial markets. The S&P 500 fell 60 points or 1% to 5,782, while the Dow Jones Industrial Complex and the Nasdaq Composite by 0.7% or 1.1% went back. Apple did not immediately answer a request for a comment.
Apple’s Investment in India
Mr. Trump’s threats will come on Tuesday after Apple’s supplier, contract electronics manufacturer Foxconn, on Tuesday announced plans to invest 1.5 billion US dollars in its Indian operations. Apple continues to produce most iPhones in China, but shift its focus on other places such as India, which is subject to lower taxes than China. Mr. Trump initially imposed a tariff of 26% on India, but that’s home until July. A 10% universal tariff for goods that are sent from overseas to the USA remains.
iPhone Production in the USA
In an earnings call in March, Cook found that more than half of the iPhones in India are manufactured for sale in the USA. With this call, Cook also indicated that the company would increase the production of iPhone assembly in India by up to 65% by this autumn. However, producing iPhones in the USA is considered a "fairy tale" due to the much higher costs for the transfer of domestic transport and revised supply chains. The production of iPhones in the USA would increase the costs for higher models to $3,500 each.
Apple’s Investment in the USA
Apple announced in February that it will invest $500 billion in the USA over the next four years. The tech giant has been described as "greatest expenses" over the next four years. As part of her investment, Apple said that in Houston, Texas, a new 250,000 square meter factory would be built up in which servers that were previously built outside the USA will be produced. The company has not announced any plans to increase domestic iPhone production.
Tariffs and US Production
President Trump has promoted planned tariffs to revitalize the US production, to secure cheaper trade agreements with other countries and to promote the other guidelines of the White House, such as the containment of unauthorized immigration and the trade in illegal drugs. Many trading experts are skeptical that these higher US tariffs are likely to increase an increase in domestic production. This is due to the fact that companies usually rely on where factors are to be localized more on factors such as work and energy costs, tax rates, political instability, and the regulatory environment.
