The U.S. President insists on domestic manufacturing, affecting Apple's stock price amid ongoing trade tensions.
U.S. President
Donald Trump has issued a stark warning to Apple’s CEO Tim Cook, threatening a 25% tariff on the importation of iPhones if the company does not manufacture its smartphones in the United States.
This announcement led to a more than 2% decline in Apple's stock at the opening of Wall Street on the same day.
In a message posted on Truth Social, Trump stated, "I informed Tim Cook of Apple that I expect iPhones sold in the United States of America to be made and assembled in the United States, and not in India or elsewhere.
If not, Apple will face a tariff of at least 25% in the U.S. Thank you for your attention!"
During a subsequent press interaction in the Oval Office, when asked if he believed he had the authority to impose tariffs on a single company, Trump replied, "It would apply to Samsung and anyone else manufacturing that product; otherwise, it would not be fair.
So anyone making that product, which I suppose will begin around the end of June."
The iPhone has become emblematic in Trump's economic and trade policies.
Previously, he exempted phones, computers, and tablets from reciprocal tariffs exceeding 100% on imports from China, an effort aimed at preventing price surges of these goods in the U.S. However, in response to the ongoing trade war with China, Apple has initiated plans to shift part of its production to India, a move that has not aligned with Trump's expectations.
Earlier this month, Trump intensified his pressure on Apple, reportedly asking Cook to halt the construction of factories in India—part of Apple's strategy to reduce dependence on Chinese manufacturing—and instead focus on increasing production within the United States.
While on a trip to the Middle East last week, Trump recounted a conversation with Cook, stating, "I had a little issue with Tim Cook yesterday.
He is building all over India.
I don’t want you to build in India."
U.S. Secretary of Commerce Howard Lutnick expressed a desire for production to remain within the U.S. rather than in countries like China and India, where he noted there would be an “army of millions of people screwing tiny screws to make iPhones.” However, the complexities of Apple's supply chain, labor costs, and the significant automation involved in iPhone manufacturing render this ambition challenging to achieve.
The United States currently lacks the extensive ecosystem of suppliers, technical know-how, and Apple’s manufacturing expertise which are predominantly located in Asia.
In China, large complexes are dedicated solely to the assembly of iPhones.
Forcing Apple to produce its flagship phones in the United States would incur substantial costs for the company, likely leading to increased consumer prices.
In a recent earnings report, Apple warned it would face approximately $900 million in additional costs in the current quarter due to tariffs imposed by Trump, despite various reductions and exemptions.
Tim Cook had previously attempted to allay Trump's concerns by promising that Apple would “spend and invest” $500 billion in the United States during Trump's presidency.
Some, including Trump, perceived this as a commitment to new investments; however, it encompassed overall spending, including operational expenses like personnel and suppliers.
This commitment mirrored an earlier pledge made by the company to President
Joe Biden during his inauguration four years prior.
Trump has a history of utilizing his political influence to pressure and intimidate businesses, educational institutions, law firms, and other entities.
He has enacted reprisals against some and issued threats against others.
Recently, he urged retail giant Walmart to absorb tariff costs without increasing product prices.
The unpredictable nature of the president’s approach has prompted rating agency Moody’s to specifically state in a recent report that it expects the rule of law and separation of powers to endure in the United States despite prevailing challenges.
The agency asserted, "While these institutional mechanisms may be tested at times, we expect them to remain strong and resilient."
Trump remarked that the tariffs would apply to all manufacturers during the signing of executive orders aimed at accelerating nuclear power plant construction, including untested small designs that promise quick deployment but have yet to be built in the U.S. He stated, "Today we are signing tremendous executive orders that will truly make us the leading power in this industry," and added that nuclear technology "has come a long way in both safety and costs."