Trump Throws Apple Under the Tariff Bus
And just like that, Apple is no longer the most valuable company in the world. That's not a joke, that's what happened today. Apple fell back behind Microsoft – $2.64T versus $2.59T – for the first time in well over a year. And they're close to falling behind NVIDIA again too. Granted, after an initial surge, most stocks fell sharply again today. But Apple fell far more sharply than Microsoft did (negative 5% versus negative 1%) and the tariff situation is undoubtedly the reason why.
I outlined why this situation was a nightmare for Apple in a post earlier today:
If you think the iPhone is going to get too expensive with tariffs, wait until you see what it costs when it's completely manufactured in the US, built by American workers earning American wages.
As much as I enjoy the Secretary of Commerce of the United States saying not just out loud, but on national television, that he believes there is an "army of millions and millions of human beings screwing in little screws to make iPhones" in China, as if the operations weren't significantly more sophisticated than that at this point, and even better, that this "kind of thing is going to come to America", that's just not going to happen. Apple would probably sooner go out of business before that happened. And in fact, if that were forced to happen, Apple may go out of business.
Sadly – for Apple – it seems like the White House doesn't fully understand this. Kudos to Maggie Haberman of The New York Times for the direct follow-up question on this topic during the press briefing today which drew the following response from White House Press Secretary Karoline Leavitt:
“[Trump] believes we have the labor, we have the workforce, we have the resources to do it. As you know, Apple has invested $500 billion here in the United States. So, if Apple didn’t think the United States could do it, they probably wouldn’t have put up that big chunk of change.”
To be fair, Leavitt could have been speaking a bit out of turn here. But as the White House Press Secretary, you don't really get to do that. If she says that's what Trump believes, that's what we're to believe that Trump believes. And if he believes that, he's... out of his mind.
Apple's "investment" here has nothing to do with manufacturing the iPhone in the US. As Chance Miller rightfully notes for 9to5Mac,
Leavitt is referencing Apple’s announcement from February, when it said it would “spend more than $500 billion in the U.S. over the next four years.” Apple’s commitment, however, made zero reference to iPhone assembly in the United States. The press release focused on R&D in the U.S., chip production in Arizona, AI server manufacturing in Houston, Apple TV+ production, and an academy in Michigan.
So Leavitt is either being disingenuous or doesn't understand the situation (or, again, Trump doesn't – or both). And this could be a real problem for Apple.
Tim Cook may have put in the leg work (and money) to try to insure that Apple was in the best possible position with the Trump administration, but at the end of the day, the President undoubtedly sees the world's most valuable company – well, again, now second most valuable company – as his greatest bargaining chip when it comes to China. Because Apple is so heavily embedded in Chinese manufacturing when it comes to the most profitable product on the planet, the iPhone, Trump must view the dynamic as not just important to Apple, but important to China too. And he's not wrong. As such, "Tim Apple" becomes yet another pawn here.
To reiterate, there's no way that Apple can or will move iPhone manufacturing to the US. They might move a small subset of the process. Or give some lip service about considering it to appease the President. But it will not happen because it cannot happen. Such a move would destroy Apple as a company. That's not hyperbole. It's their most important and profitable product.
Destroying their margins, as would have to happen in a move to the US, would cripple the company as it stands today, at least on the stock market. And jacking up the price, as would be required to maintain those margins and manufacture in the US, would probably destroy them. People love the iPhone. A lot fewer people are going to love an iPhone that costs $3,000 or $4,000. It's just math and supply/demand curves.
The next days and weeks leading up to Apple's Q2 earnings on May 1 are going to be fascinating to watch. What does Tim Cook say and/or do to try to appease the President? Or does he go against the President to assure the shareholders? What about China?!
That $1M he gave to Trump certainly looks like chump change now. Sadly, Cook looks like the chump.
M.G. Siegler
M.G. Siegler
M.G. Siegler
Update April 10, 2025: And now that we have a pause in the reciprocal tariffs, there are seemingly more some details (with some Apple questions outstanding)...
M.G. Siegler