- Apple CEO Tim Cook has navigated Trump's China tariffs before.
- Can he do it again? This time around, Trump is even more aggressive about punishing China — which Cook depends on to make his iPhones.
- One thing in Cook's favor: Apple is so big that the ripple effects from its tariff troubles could affect lots of people.
The tariffs are paused, except the ones that aren't. Which includes a whopping 145% for products shipped from China.
What does that mean for Apple?
Yes, lots of giant tech companies have deep ties to China, from Amazon to Meta to Tesla. But Apple is fully enmeshed in China, where it has spent years building up the supply chain for its iPhones, which are the company's core business.
If those tariffs stay in place, it could jack up the price of an iPhone by hundreds of dollars. Maybe more.
So now what?
Spoiler: No one seems to know. (An Apple rep declined to comment; I haven't heard back from the White House.) But if you're an Apple optimist, you are probably wishing for one, or both, of these plans.
Plan one: Tim Apple to the rescue.
After Trump's first election in 2016, Apple CEO Tim Cook basically wrote the playbook for business leaders hoping to stay afloat in Trumpland. He frequently engaged with Trump privately, never criticized him publicly, and was willing to play along when Trump wanted to use Apple as a symbol of Big American Companies That Are Coming Back to America.
That included keeping mum when the president falsely claimed that Apple had opened a MacBook plant in Texas during Trump's reign (the plant had opened years before, during the Obama administration).
And that work paid off when Apple got exemptions from the China tariffs Trump enacted during his first term.
Now Apple bulls are hopeful Cook will find a way to wriggle out again. They're especially buoyed by Trump's comments on Wednesday suggesting he will give certain companies some kind of tariff relief.
"Some companies, through no fault of their own, they happen to be in an industry that is more affected by these things than others," Trump said. "You have to be able to show a little flexibility, and I'm able to do that."
On the one hand, it would seem much harder for Trump to give Apple a pass this time around, since his administration has consistently talked about getting Apple to build iPhones in the US. Exempting Apple from some or all of his tariffs makes that even less likely.
On the other hand, Trump is consistently inconsistent. For instance, while it is engaging with China in a trade war and talking about the need for the US to stay ahead of China in the AI arms race, Trump's administration has reportedly given Nvidia its blessing to sell its top-of-the-line chips to China. Prior to that, Trump was reportedly set to halt those sales.
Plan two: The short-term end-run
Maybe Cook convinces Trump to give Apple a pass, or a partial pass. But in the meantime, Cook has been trying to give himself as much flexibility as possible, by reportedly shipping planeloads of iPhones — perhaps as many as 1.5 million units — from China and India to the US in advance of new tariffs. That would give him the ability to keep selling the current versions of iPhones at the same price, at the same profit margin, at least for a while.
But then what? Apple usually unveils, and starts shipping, new iPhone models in the fall. It's almost impossible to imagine those getting made anywhere but China, no matter how hard Apple scrambles to find extra production capacity in lower tariff countries like Vietnam or India. And those 1.5 million older model phones won't satisfy demand for a company that sells a reported 220 million phones a year around the world.
And … that's kind of it, as far as options go. Note that there's no real consideration of Apple building up a brand new supply chain infrastructure that's fully separate from China — certainly not in the short to mid-term.
Meanwhile, even if you don't own an iPhone and/or never plan on buying a new one again, Apple's iPhone dilemma is probably still your dilemma. Even if you don't own Apple stock directly, you are almost certainly exposed to it, because the $3 trillion company makes up a giant slice makes up a giant slice of the major stock indexes.
As journalist Patrick McGee notes: "If your retirement is invested in index funds, Apple is your single biggest investment."
The fact that Apple's stock price only dropped by 4% on Thursday — compared to 7% drops for Meta and Tesla, and 5% for Amazon and Nvidia — suggests that investors feel reasonably confident that Tim Cook can navigate this one. Maybe they're right. Then again, these are the same investors who were surprised by Trump's tariff rollout last week. I wouldn't feel confident about any of these outcomes.
