Tim Apple Strikes Again!
As Aime Williams, Demetri Sevastopulo, and Ryan McMorrow report:
The Trump administration has excluded smartphones and other consumer electronics from its steep “reciprocal” tariffs in a significant boost for Big Tech as the White House battles to calm global markets after launching a multifront trade war.
According to a notice posted late on Friday night by Customs and Border Patrol, smartphones, along with routers, chipmaking equipment, wireless earphones and certain computers and laptops, would be exempt from reciprocal tariffs, which include the 125 per cent levies Donald Trump has imposed on Chinese imports.
And as basically every article on the topic today is quick to note, one company above all likely benefits the most here:
The dispensation for smartphones and computers will be especially welcomed by Apple as the bulk of its supply chain is centred on China. Analysts estimate about 80 per cent of its iPhones are still made in the country even as the tech group worked to diversify production to India in recent years.
The majority of iPhones are made in a big factory complex in Zhengzhou operated by Apple’s manufacturing partner Foxconn. Workers at the plant told the Financial Times this week that operations were normal but that they were worried about the impact of the trade war.
Shares in the US tech giant were one of Wall Street’s biggest casualties in the days immediately after Trump announced his reciprocal tariffs. About $700bn was wiped off Apple’s market value in the space of a few days.
Of course, this is hardly surprising – it's also what happened during Trump's first term in office. The difference here, of course, is that the tariffs were far more onerous this time. And for a while, it seemed like Team Trump was ready to play hardball – including, perhaps, using Apple as leverage, going so far as to suggest they should be making the iPhone in the US. Obviously, that was never going to happen. And once Trump caved on the reciprocal tariffs earlier this week, I noted that perhaps the biggest outstanding issue was the Apple/China situation, which I suspected would be resolved as well:
The real interesting next question is what happens to Apple in all of this. They briefly lost their crown as the world's most valuable company in this madness, but came roaring back yesterday (even more so than many others, thus allowing them to take back the crown from Microsoft). Yet their peril remains very real because of their reliance on China. And the administration's (stupid) talking points about having them build iPhones in the US puts them in an even more awkward situation.
Still, if I had to guess, I imagine Tim Cook will work his magic to once again get a tariff exemption from Trump. But the wild card here is what China does. Again, if they're looking for leverage, they have it in Apple over the US, as long as the US is interested in keeping Apple as the most valuable company in the world...
Whoomp, there it is. Cook's ongoing relationship with Trump has once again paid off. I'm not sure I would go so far as to suggest that in the literal sense, but well, those $1M donations remain a really bad look (for Apple and everyone else, of course). But that won't matter to Apple shareholders – and Wall Street more broadly. All that matters is that Cook once again got Trump to cave on the tariffs that would have hurt Apple's bottom line badly. And so while Cook may have other issues at the company that he's perhaps handling less deftly, this was the most pressing matter. As I wrote yesterday:
Of course, Cook has other problems now – far more immediate ones with the tariff situation as it relates to their supply chains, mainly in China. Cook is seemingly the best person in the world to deal with this particular crisis – as he already did so once, in Trump's first term – but it's also, in a way, a crisis of his own making. Arguably Cook's crowning achievement at Apple is the supply chain he built in China which allowed the company to scale the business in ways that the world had never seen before. And that, in turn, gave Apple that title of most valuable company in the world. It may have been Steve Jobs product decisions that led up to that point, but it was Cook's supply chain decisions that got them over that line.
But, as it turns out, live by the Chinese supply chain, die by the Chinese supply chain. Apple has been hustling to diversify, of course. But many of the other countries in which they're now operating also face tariff challenges. What Cook really needs are exemptions, again, just like the last time around. He paid the cost to the boss, but that boss may have a different agenda this time. Yet again, we'll see...
The tariff situation this time is clearly a lot more fluid than it was in Trump's last term. Which is a nice way of saying "chaotic" and "terrifying". For proof of this, look no further than the reports of Apple, um, loading up planes with literal tons of iPhones to get them out of China to beat any would-be tariffs. Clearly, they were taking this threat seriously.1 And don't be shocked if this isn't the end of Trump trying to leverage Apple in this fight – especially if China tries to do the same. But for now, Tim Apple is back, baby.
M.G. Siegler
M.G. Siegler
M.G. Siegler
Update April 13, 2025: And, of course, more potential chaos just a day later. The administration is now saying this wasn't actually an exemption and really is just shifting these products under the semiconductor tariff rate. Of course, that rate hasn't come yet and may not for a couple months. And, well, a lot may change between now and then... What a clusterfuck.
Update April 14, 2025: And today we get this fun nugget from a Trump press conference – when asked specifically about the tariff "exemptions" and how they may benefit some companies, he uttered the words, "I speak to Tim Cook. I helped Tim Cook recently."
1 And, it must be noted, this could ultimately be a good thing for Apple in the long run, as it will force them to move even faster to diversify their suppy chain.