Apple core? Baltimore. Who’s your friend? Trump vows to slap tariff on iPhones

(Originally published May 26 in “What in the World“) Apple CEO Tim Cook’s bad year, as The Wall Street Journal puts it, keeps getting worse.

As if things weren’t bad enough, Trump on Friday added to Cook’s troubles by threatening to impose a 25% tariff on its imported iPhones if Cook didn’t grant Trump’s wish for more (maybe even all) iPhones sold in the U.S. to be made domestically.

“I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” Trump posted. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.”

Trump later added that smartphones by Apple’s competitors would also be included to make the tariff “fair.”

As detailed in this space earlier that very day:

Apple still makes an estimated 90% of its iPhones, 80% of its iPads, and 55% of its Macs in China. So, Trump’s 145% tariffs on China imports would be no good for Apple: analysts estimated the price of an iPhone would jump to $1,600 from $1,000. After CEO and Trump donor Tim Cook lobbied him, Trump exempted smartphones and other electronics made in China from his “reciprocal” tariffs. But they were still subject to other tariffs on China-made goods, which Cook estimated during his latest quarterly earnings call would cost the company $900 million in the current quarter alone.

Apple’s solution: make more of its U.S.-bound iPhones in India. Cook said in the call that it would be able to ensure that more than half of iPhones sold in the U.S. this quarter came from India rather than China. That’s part of a longer-term plan to shift 25% of its global iPhone production to India, and lower its manufacturing risk in China, that Apple has been working on since before Covid. As part of that, Apple’s big Taiwan-headquartered supplier, Foxconn, is busily building a $1.5 billion components factory near Chennai and a display module plant in Tamil Nadu.

But Trump still isn’t happy. Last week, he said he didn’t want Apple to make its iPhones in India, either. He said he wants Apple to make the iPhone in the U.S.A., remarks that have clouded talks between India and the U.S. on lowering Trump’s 26% reciprocal tariff on imports from India.

Trump’s administration is also pushing back on Apple’s efforts to roll out AI on its devices in China, which accounts for a fifth of Apple’s global sales. Doing so requires making a deal with China’s Alibaba. But the White House fears doing so will help China hone its own AI capabilities, thus making it a more dangerous military adversary.

And Apple now has to compete with every other China exporter to rush goods to the U.S. before Trump’s 90-day pause on tariffs expires. Container bookings for the voyage from China to the U.S. more than doubled the week Trump announced the pause to a level not seen in more than a year. But because shipping companies have reduced the number or size of ships making the trip, room for those containers is tight, which is sending freight rates higher.