WASHINGTON: US President Donald Trump on Friday threatened Apple and other smartphone manufacturers with a 25 percent tariff unless their devices are built in the United States.
Trump initially said the tariff would apply only to Apple – an unusual move to single out a specific company in trade policy. However, he later expanded the threat to include all smartphone makers.
“It would be also Samsung and anybody that makes that product, otherwise it wouldn’t be fair,” Trump told reporters in Washington, adding that the new tariffs would take effect by the “end of June.”
While Apple designs its products in the United States, most iPhone assembly occurs in China, which remains embroiled in a trade war with the United States.
Apple has announced plans to shift some production to other countries, including India, but Trump said this would not satisfy his demands.
In a post on Truth Social, Trump wrote that he had “long ago informed Tim Cook of Apple that I expect their iPhones 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 renews trade threats, taking aim at European Union, Apple
“If that is not the case, a Tariff of at least 25 percent must be paid by Apple to the US,” he added.
Trump’s comments echoed statements he made during a trip to Qatar last week when he urged Apple to bring iPhone production stateside.
“I had a little problem with Tim Cook,” Trump said on May 15.
He recounted how he told Apple’s CEO: “We’re not interested in you building in India… we want you to build here and they’re going to be upping their production in the United States.”
Apple’s main rival, South Korea’s Samsung, finds itself in a similar situation, with most of its production in Vietnam, China and India.
Apple and Samsung account for about 80 percent of smartphone sales in the United States. Smaller players including Google, Xiaomi and Motorola also have most of their handsets made abroad.
‘Fairy tale’
Analysts widely agree that shifting iPhone manufacturing to the United States is unrealistic and would require a fundamental overhaul of Apple’s business model – a process that could take years, if it’s possible at all.
According to Wedbush Securities estimates, about 90 percent of Apple’s iPhone production and assembly remains based in China despite some production shifts.
Reshoring iPhone production to the United States “is a fairy tale that is not feasible,” Wedbush Securities analyst Dan Ives said in a research note.
Trump warns Apple of 25% tariffs if iPhones not made in US
The constant pressure from the White House has taken a toll on Apple’s stock price, which has fallen more than 20 percent since Trump took office in January with his protectionist agenda.
Apple shares closed down 3.0 percent in New York on Friday.
Unlike during Trump’s first term, when Apple received exceptions from China-focused trade measures, the company has become a regular presidential target this time around.
Cook warned last month about the uncertain impact of threatened US tariffs on Chinese products, which at one point were hiked to 145 percent, despite temporary relief for high-end tech goods like smartphones.
He said Apple expects US tariffs to cost it $900 million in the current quarter.
“Prices of handsets look set to rise, given iPhones will end up being more expensive, if the threats turn into concrete trade policy,” said Susannah Streeter, an analyst at Hargreaves Lansdown.
“While die-hard fans will still be prepared to pay big bucks for Apple’s kit, it’ll be much harder for the middle-class masses who are already dealing with price hikes on other goods, from Nike trainers to toys sold in Walmart.”
Last week, the United States and China agreed to suspend sweeping tariffs on each other’s goods for 90 days, marking a temporary de-escalation in the trade war.
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