Maybe the iPhones aren’t safe after all.
Donald Trump put a damper on Friday’s pre-Memorial Day weekend trade when he insisted for the umpteenth time that Apple move final assembly of the world’s most ubiquitous consumer electronics product to America.
Tim Cook was “long ago informed” that iPhones for sale in the US “will be manufactured and built in the United States, not India, or anyplace else,” Trump said, on TruthSocial. “If that is not the case, a tariff of at least 25% must be paid by Apple to the US.”
What can you say? Here we go again. Last month, when markets were still reeling from the botched “Liberation Day” tariff unveil, Trump carved out an exception for consumer electronics out of China in a bid to pacify investors, forestall higher prices and thereby put a floor under his already flagging approval ratings. “iFold,” I joked.
Less than 48 hours later, Howard Lutnick, Jamieson Greer and Stephen Miller showed up on a hodgepodge of network news shows to insist Trump didn’t fold. The exemptions weren’t exemptions, they said. Consumer electronics, including the iPhone, will be subject to sector-specific tariffs — semiconductor duties — at a yet-to-be-determined date and rate.
Although Trump’s trade stance softened this month, he never gave up on the idea of made-in-America iPhones. Cook’s endeavored since the pandemic to diversify Apple’s production away from China and to India with varying degrees of success. Three quarters (or more) of iPhones are still made in China, and Trump’s protestations aside, it’s not possible to make them in the US without increasing prices materially.
I don’t know what the actual numbers are, but I have to assume the cost of moving final production to America would far exceed the 25% tariff rate, which means gun to his head (hopefully not literally) Cook would just pay the tariffs, which is to say you’ll pay the tariffs. Or Verizon will. Or AT&T will. Because guess who’s not going to pay them? Apple’s stockholders in the form of lost margin.
It wasn’t immediately clear whether Trump was just ranting on Friday, responding to some news report or whether, perhaps, his iPhone remark suggested the administration’s getting closer to announcing the details of the sector-specific semi tariffs.
Whatever the case, these sorts of errant remarks — out-of-the-blue broadsides against a publicly-traded company which comprises a meaningful share of S&P 500 market cap — are own-goals. Whatever the impetus, there was no reason for Trump to shout about this on social media.
As noted here last month, iPhones would cost up to $2,500 with tax, and assuming no carrier subsidies, in a scenario where Trump somehow manages to compel Cook to assemble them domestically. That’s according to BofA’s Wamsi Mohan.
“While it may be possible to move final assembly to the US, moving the entire iPhone supply chain would be a much bigger undertaking and would likely take many years, if it’s even possible,” Mohan wrote, in an early-April note.
The increase in labor costs alone from re-shoring iPhone manufacturing would raise prices by 25%, Mohan estimated. So, there’s your 25% tariff.
If you tack on duties applicable to imported sub-assemblies (once various tariff “pauses” expire), the total cost of a US-assembled iPhone could nearly double.
Obviously someone forgot to take their meds this morning. How in the effing hell do so many people believe in this ridiculous man child? This presidency has been a total and complete farce and everyone knows it deep down, whether or not their pride allows them to acknowledge it.
What was that wonderful acronym you used in place of TDS again?
Tariff Derangement Syndrome?
Just as he declared Tesla’s Model S as “everything’s computer,” I’ve taken to declare him “everything’s toll booth.”
Does anyone honestly believe Mar-A-Lardo or Lutnick give one flying hoot where iPhones are assembled? It’s leverage and exercise of power. But now he’s discovered the beautiful word “tariffs” just like an infant discovers the kitchen cabinet where the pot lids cum cymbals are stored. Our government needs a giant childproof cabinet lock.
We used to say things like, “one of these days he will go too far”. Today I think there might be nothing Trump can do or say, that will drive his cult followers away.
So we have a de-facto 25% smartphone tax now
At $2500 a phone it’s gonna get a lot easier to separate myself from a smartphone.
If POTUS decrees a tariff on text messages next week, the truth will be revealed: H is manipulating the man in order to achieve his noble goal of eliminating smart phone culture and re-socializing the American public.
?
To my recollection tariffs are traditionally used to protect specific markets like steel, cars or an agricultural product. How is it legal to tariff one specific product from an entire category called cellphones. Is Trump punishing a US based company in favor of Samsung, Sony and Huawei? So could Trump tariff any Toyota not made in the US but apply nothing to Subarus or Hondas made overseas. Following that thinking, is there going to be a line of CEOs with jets, hotel projects and Milania film deals at Trump’s door hoping to have their competitors disadvantaged.
25% tariffs applied to all imported smartphones might not faze, and might even benefit, AAPL.
Suppose AAPL TSM and HonHai work a three-way deal – TSM marks up its US-mfg semis to AAPL, HonHai discounts its China assembly, TSM pays HonHai.
As the only smartphone maker sourcing processors (at scale) from TSM’s AZ fabs, only AAPL could do this.
As special 25% tariff applied only to AAPL smartphones – that would be an interesting litigation.
Trump says would levy tariff on all smartphones if tariffs AAPL. Of course, that is what he says today . . .
I really hope he tries this one. It will mean he can tell any firm what to do. The top CEOs ill not stand for this. Few in this country who want to work are capable of doing this work and it won’t happen.
“Captain Capricious” strikes again!