Apple boss Tim Cook’s bonhomie with Trump meant little as he imposed crushing tariffs on China – where most iPhones are made - Shawn Thew/EPA/Bloomberg
For years, Tim Cook has become something of a horse-whisperer figure in his dealings with Donald Trump.
“Tim Cook calls Donald Trump directly,” the US president said of Apple’s chief executive during his first term in 2019, speaking in the third person.
“That’s why he’s a great executive. Because he calls me and others don’t.” Other bosses, he said, “go out and hire very expensive consultants”.
Despite Trump being deeply unpopular with much of Apple’s Silicon Valley workforce, Cook – a seasoned corporate diplomat – maintained a warm relationship with him, steadily navigating the White House’s choppy trade war against China.
His lobbying was crucial to Apple securing exemptions for billions of dollars in imports of Chinese-made smartwatches and other components. Trump, meanwhile, claimed to have brought Apple manufacturing back to the US when he toured a Mac computer factory in Texas (the factory had been open since 2013, but Apple did not correct the president).
Trump imposed crushing tariffs not only on China, where the majority of Apple’s iPhones are made, but also on countries such as Vietnam and India, where Cook has quietly moved parts of its production in recent years in anticipation of further Chinese tensions.
Trump’s tariffs could lead to the price of an iPhone rising by up to 43pc, according to analysts at Rosenblatt Securities. The most expensive iPhone 16 Pro Max would cost around $2,300 (£1,773), up from $1,599 today, while the cheapest would cost $1,142, up from $799.
Alternatively, swallowing some of the price increases would lead to a huge hit to the company’s famously healthy profit margins – knocking tens of billions of dollars off its bottom line.
On Thursday, Apple’s shares slumped 9.3pc, wiping $311bn off the company’s market value – the second biggest one-day fall in a company’s value in history (the drop was only eclipsed by Nvidia’s $600bn sell-off in January).
The White House confirmed that unlike in 2018, there were no carve-outs for the products that Apple makes.
The blow threatens to raise questions over Cook’s years-long courting of Trump, as well as a generational shift away from China. While the strategy seemed prescient in a bilateral trade war, Trump has hit almost every country with import duties.
Cook was the architect of Apple’s shift to China a quarter of a century ago, and then its gradual decoupling. Hired in 1998, shortly after Steve Jobs returned to save the company, he moved production from the US to set up a complex but devastatingly effective Chinese supply chain using contractors such as Foxconn.
In recent years, he has sought to unwind this, jostling partners to set up factories in other Asian countries.
Apple supplier Foxconn ramped up investment in its mammoth Vietnamese plant amid a push to diversify supply chains - Linh Pham/Bloomberg
“Trump’s new policies have thrown a wrench into Apple’s supply chain gears, essentially negating the tariff-hopping that Apple targeted through diversifying production geographies,” says Mark Zetter, an electronics supply chain expert.
“Apple moved some production to countries like Vietnam, Thailand, Malaysia, and India when the world was less polarised. But these strategies no longer apply.”
Vietnam, where Apple now makes AirPods, iPads and Apple Watches, was one of the worst hit by Trump’s new tariffs, receiving a tariff rate of 46pc.
While this is lower than the 54pc effective rate in China, it does not account for the heavy investments Apple and its manufacturing partners have made to move some production to the country. China may also have a stronger chance of tariff relief: Trump said on Thursday that Beijing could secure concessions if it approves the sale of TikTok’s US business.
Apple has also faced a political backlash for decoupling from China, which accounts for around 15pc of Apple’s revenues.
Authorities have reportedly prevented skilled employees from leaving the country, and the company has faced muted criticism in state media. This may also have had an impact on Apple’s own sales in China, which have fallen for two years in a row.
This year, Apple is expected to make around 15pc of its iPhones in India, and ministers in the country have said the company plans for a quarter of production to be based there. That now remains an open questions, with the country facing a 26pc US tariff.
Apple has not been the only company to move production out of China in an attempt to avoid tariffs.
Nike – on whose board Cook sits – now sources around 50pc of its footwear from Vietnam, with the rest from China, Indonesia and Cambodia. Its clothes are made in the same countries.
Shares in the fashion brand were down as much as 12pc on Thursday as investors dumped the stock. The slide wiped more than $10bn off Nike’s value in one day, seen by some as payback for the company, which has been reluctant to give in to Trump’s anti-DEI push.
Tariffs may be rescinded, and Cook will inevitably be seeking to use his relationship with Trump to push for leniency, whether through lower tariffs on some countries or through exemptions. He has already promised to invest $500bn in the US over the next four years.
Trump’s answer, however, may simply be demanding that Apple brings production home.
At present only a small number of high-end Mac computers are made in America. The president would see it as a vindication of his policies if the stamp on the back of the iPhone said: “Designed by Apple in California, made in America.”
Zetter says there is no chance of that. “There is no single location in the Americas that can amass a workforce of 800,000-plus like Foxconn can in China,” he says. “Apple currently has extremely limiting options beyond exemptions and negotiations.”
To date, Cook has deftly handled an unpredictable president. But this week may represent his biggest test yet.
