A call from Tim Cook helped convince Trump to introduce tariff exemptions
CEO Tim Cook's working relationship with President Donald Trump has once again helped Apple escape issues in the U.S.-China tariff battle. Here's how.
Tim Cook [left], President Donald Trump [right]
On April 11, following after a week of increases to the import tariff for Chinese goods entering the United States, President Trump made an announcement. While many products would be affected by a high import tariff of 145% at the time, Trump decided he was giving a reprieve on a variety of tech products and components.
While the reprieve itself is not permanent, with a semiconductor tariff expected to arrive in the future, the exemptions were immediately helpful to Apple. Indeed, a few days later, Trump confirmed that he was in talks with Tim Cook, and that he "helped" him with the tariff exemption.
In a report from the Washington Post, it appears that Cook did play a part in the tariff changes becoming a reality.
Warnings and silence
Cook talked to Commerce Secretary Howard Lutnick earlier in April, two people familiar with the phone call told the report. The call was about the potential impact of tariffs on iPhone prices, and also involved other senior White House officials.
There was also a decision by Cook to avoid publicly discussing or criticizing Trump and his policies. This was despite other executives taking to television to denounce the tariffs.
At the end of the week, the Trump Administration decided to implement the exemption on products Apple manufactures in China and ships to the United States. The decision had a byproduct of helping other major U.S. tech firms who made similar products.
There apparently wasn't a complete agreement on the issue within the White House. Aide Peter Navarro allegedly wanted the tariffs to stay as they were without any electronics carveout.
The ol' Cook razzle-dazzle
The chief reason for Trump listening to Cook is because of his established relationship that has continued into the second term. Wilbur Ross, commerce secretary during Trump's first term in office, referred to Cook as "playing a very careful role" while being both very dependent on China and very important to U.S. interests.
Ross continued that Cook got respect from the White House because "he's not a public whiner, he's not a crybaby." As he had a voice of reality, Ross believed that it was unsurprising that Cook would be heard and his comments well received by the administration.
The repeated conversations and meetings with Trump, which have spilled over into the new term, as well as initiatives such as a personal donation to Trump's inaugural fund, have helped Cook stay an important person in Trump's eyes.
The Cook playbook has also been one that executives of other companies have also copied following that first term. This has included attempts by CEOs such as Nvidia's Jensen Huang and Google's Sundar Pichai meeting with Trump over the last few weeks, schmoozing to try and minimize the damage from Trump's policies.
Other major tech names have also attempted to make themselves more well known to Trump, all with the same motive to get into Trump's good books.
Not Apple-specific, but it is
Outside of comments from Trump himself that he was helping Cook and Apple, the White House has still worked to try and make it seem like it wasn't an Apple-specific exemption.
Lori Wallach, executive director of Rethink Trade at the American Economic Liberties Project, highlights how Apple has been the biggest beneficiary of the exemptions. Of seven tariff lines added after the April 2 exception list, Wallach points out that they all consist of products that Apple makes, but few others do.
For its part, the White House is running an investigation into semiconductors, as a means to appear above-board and not playing favorites.
White House spokesman Kush Desai insisted that there were no exemptions granted to benefit Apple or any other company specifically. The Administration is "taking a nuanced, strategic approach" on China, Desai continued.
Despite the pretense that everything is equal to all in the market when it comes to exemptions, the affair does demonstrate that Cook has led the way among other CEOs by cultivating a very beneficial relationship with the country's chief.
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Comments
Also, when the White House was escalating their retaliatory tariff snit with China, some other companies' stock prices got pummelled even worse than Apple. Notably Dell and HP share prices took massive beatings. We've also seen Nvidia take a beating even though their technology is not present in any currently marketed Apple device to my knowledge. Same with AMD and Intel.
However you're just looking at the top level label on the box. There are tons of components in all types of products. The tariff isn't just applied to the final assembled SKU.
Companies who are more focused on services (Google, Meta, Amazon, etc.) are less affected by technology hardware tariffs in terms of revenue but certainly those tariffs affect operations (the cost of doing business) in doing things like increasing the server costs in data centers, stuff like that.
In the end, nothing will be cheaper for Americans, everything will end up costing more. Tariffs are really just a federal sales tax without being a line item on a store receipt.
looking forward to iPhone 17 and am m5 max MacBook Pro 16” if a large iMac doesn’t materialize by end of winter. Been looking forward to apple prices heading toward back to reality in pricing now that the covid uncertainty and shutdowns has been over for a while. Then the tariffs came, but also seems to be done in a way that could enable healthier pricing (for the consumer - it’s already been healthy for apple). Wanted to hold out for m6 in 2nm, but I don’t know if I can wait much longer.
"You do the right thing because it’s right. Not because it’s simple or easy to do."
This would be a more meaningful if this administration's tariff policy was actually defensible. What they are doing is not "right," and in fact, the ridiculous formula they used to create what they falsely claimed to be "reciprocal" tariffs only shows that they did what was easy - for themselves - to generate their chart of tariffs. Also easy for them was the default 10% applied to every country (except Russia) without regard to whether there were any "trade deficits" or documented "abuses" at all. So from the start, your premise is false.
"Things were getting out of hand."
Here you're referencing the emergency that wasn't an emergency. You inadvertently give that up with your next sentence.
"Some had been that way for a while."
Things that are getting out of hand and have been that way for a while may require a response, but the gradual nature implicit in the description strongly suggests that any response should be well thought out and measured, not impulsive and reactive. There may be a problem, but it's clearly not a sudden emergency. It is actually possible to use bold tactics to implement a careful strategy. Alienating the entire world, including our closest allies before attempting to take on our largest trade "opponent" is not that. It's pure foolishness.
"These recent actions put the world on notice".
They did indeed. The world has been notified that the United States is no longer a reliable trading partner or ally. They have also been notified that the administration's actions are not based on actual facts and conditions, and that responses giving the US administration exactly what they say they want will likely be rebuffed anyway, so why capitulate early?
"With tariffs, foreign goods get more expensive, leading to a glut of unsold items when consumers buy elsewhere. That hurts the seller much more than the buyer."
You are making the false assumption that foreign manufacturers produce items on spec with no buyer identified. It's pretty doubtful that this happens in manufacturing*. Also, in many cases, there is no "elsewhere" available for consumers. In the next couple of months, there will be many headlines about products that US consumers want and need that cannot be found at any price.
For goods already ordered by US importers, there is almost certainly a contract in place. The company that placed an order before tariffs were imposed is almost certainly obligated to pay for those items. If they refuse and renege on their contract, even if the tariffs are all dropped a week later, that importer will no longer have any credit with the foreign manufacturer they refused to pay. So they'll probably pay the manufacturer for orders already placed. The question then becomes, can the importer pay the tax required before receiving the items, or will they have to eat the loss and leave the product on the ship? If the tariff is 145%, and the importer knows they can't sell the items for 2 1/2 times the normal price, they lose considerably less money by paying the manufacturer and abandoning the purchase before paying the tariff.
*On the other hand, in agriculture, season-long lead times and the variabilities of weather mean farmers have to plant speculatively. China isn't paying up front for soybeans that haven't been planted and harvested yet. The US farmer that has been selling soybeans to China in the past is shouldering that risk. Many have already bought seed and many of those may have planted already. So as China retaliates in the tariff war, the US farmer must decide if they risk spending more money to water, fertilize, grow and harvest their soybeans in hopes that things will be resolved by then, or do they cut their losses now and plow the crop under?
You're right that "supply and demand" are at play here, but you're grievously misguided in your belief that these actions are more painful "over there" than they are here. Nobody wins a tariff war.
Of course other countries want access to the US consumer market. No one is even denying that some countries have engaged in unfair trade practices.
The point that you are continually ignoring is that this administration's approach is detrimental to improving those trade practices. Being effective at breaking things does not imply there is any particular aptitude for fixing them after they are broken.
You parrot the talking point that "deals are being made." What deals are being made? Israel, Vietnam and others offered the Trump administration exactly what they said they wanted -total capitulation- and have already been rebuffed. No deal. What deals are being made? If your answer is it's secret, or it's still in process or some similar variation, then go ahead and retract your claim that deals are being made. No deals have been made, and low-hanging fruit that could have been used as "proof" deals can be made were tossed aside. But everything has been smashed. Every country, including those inhabited only by penguins, has been penalized (except Russia), assuring that we have no more friends in the world. This in turn weakens our position in negotiating presumably our greatest trade dispute with China. If we still had any friends, we'd have more leverage to force a better deal with China. Now, our former friends are looking at China and wondering if maybe they're the more stable trading partner. A month ago, China was the international pariah, but Trump's impulsiveness now make the US the pariah and elevates China's position on the world stage.
It's entertaining that while you accurately point out that "the USA is the largest consumer economy in the world," you continue to misunderstand that this means we should expect -as part of fair trade- that we will buy more from many countries than they buy from us. Much of this trade war is based on the false premise that a trade deficit with any given country is necessarily "bad." It's exactly this false premise that has caused the Trump Administration to undercut its own position by penalizing friends and allies.
So sure, the US has power stemming from its position as a buyer of things, but we have considerably less power now than we did just a few weeks ago.