In true Trumpian fashion, there is a get out of jail free card for those who bend the knee, and the Fruity Cargo Cult Apple is already cashing in.
The latest announcement came straight from the Oval Office where Trump met with Apple chief executive Tim Cook. Cook promised an extra 100 billion dollars in US investment, raising the company’s total spend to $600 billion dollars over four years in what looks like a expensive attempt to stay on Trump’s good side.
Trump said: “We’ll be putting a tariff on approximately 100 per cent on chips and semiconductors, but if you are building in the United States of America there’s no charge.”
The move is being sold as a win for US national security and domestic industry, but it has already sparked confusion inside Trump’s administration. A former US official told the Financial Times that the president caught the commerce department off guard and left officials scrambling to explain what the new rules mean as they appear to have been made up on the fly to threaten chipmakers to set up shop in the US.
To make matters worse the tariffs are on top of Trump’s reciprocal tariff regime kicks in, targeting trading partners and allies including the EU and Japan. The chip sector appears to be next in line, with a looming Section 232 investigation threatening more duties on semiconductors and the devices that use them, including Apple’s hardware.
Job’s Mob was clearly prepared. Cook presented Trump with an engraved US-made glass plaque during the meeting and showing a sickening display of obsequious. This was rewarded when Trump called him “one of the great and most esteemed business leaders and geniuses and innovators anywhere in the world.”
Nvidia boss Jensen Huang turned up at the White House for talks earlier in the day, though neither he nor Trump had anything to say publicly.
Nvidia and TSMC are spending billions to expand US production, the announcement lands like a green light. TSMC’s shares jumped more than four per cent in Asian trading on Thursday and Samsung’s rose nearly two per cent.
TSMC appears to be in the clear. Taiwan’s chief economic planner Liu Jing-chin told lawmakers the tariffs would not hit the company’s US-bound output. “So far, for TSMC this is good news,” he said.
Apple, meanwhile, has laid out a long list of partners in its effort to placate Washington. These include Corning, Applied Materials, Broadcom, GlobalWafers, Texas Instruments, Samsung and TSMC. A 2.5 billion dollar chunk will be used to make all iPhone and Apple Watch cover glass in Kentucky.
While all this seems like a Trump victory, it is hard to see what it accomplishes. Fewer than five per cent of the parts in an iPhone are made in the US. IDC analysts and supply chain experts are not convinced America is ready to build smartphones at scale and say Apple’s margins will take a hit if the company moves production stateside.
Apple has already warned of 1.1 billion dollars in tariff-related costs for the quarter ending in September if current duties remain in place.
But it is fairly clear that Trump does not understand what is happening and there is no chance that iPhones will be made in America.
“This is a significant step towards the ultimate goal of ensuring that iPhones sold in the United States of America also are made in America,” he said.