Donald Trump on Wednesday celebrated a commitment by Apple to increase its investments in US manufacturing by an additional $100bn over the next four years.
Apple’s plan to up its domestic investment comes as it seeks to avoid Trump’s threatened tariffs, which would increase the tech giant’s costs as it relies on a complex international supply chain to produce its iPhones. Apple’s CEO, Tim Cook, warned during an earnings call in May that the tariffs could cost the company up to $900m that fiscal quarter alone.
After Cook gifted Trump a US-made souvenir with a 24-karat gold base at the Oval Office on Wednesday, the president praised the corporation, telling reporters: “Companies like Apple, they’re coming home … This is a significant step toward the ultimate goal of ensuring that iPhones sold in America also are made in America.”
Cook said many components of the iPhones are already made domestically, including glass, semiconductors and face ID, but that final assembly of the devices would remain overseas “for a while”. In an earlier statement, Cook had said the new investments involve work with 10 companies across the US that produce components used in Apple products.
Apple had previously said it intended to invest $500bn domestically, a figure it will now increase to $600bn. Apple also claimed that it would directly hire 20,000 US workers over the next four years.
Trump in recent months has criticized the tech company and Cook for efforts to shift iPhone production to India to avoid the tariffs his Republican administration had planned for China. The same day as the White House announcement, Trump doubled US tariffs on India from 25% to 50%.
While in Qatar earlier this year, Trump said there was “a little problem” with Apple and recalled a conversation with Cook in which he said he told the CEO: “I don’t want you building in India.”
India has incurred Trump’s wrath, as the president signed an order on Wednesday to put an additional 25% tariff on the world’s most populous country for its use of Russian oil. The new import taxes to be imposed in 21 days could put the combined tariffs on Indian goods at 50%.
Apple had attempted to get ahead of any tariffs on India in April by shipping as many as 1.5m iPhones from the country into the US, according to Reuters.
The company has been uniquely threatened by Trump’s tariffs as iPhones include parts manufactured in dozens of countries and the devices themselves are largely assembled in China. Shifting production of the devices to the US would drastically increase the cost to the point that most analysts view an American-made iPhone as a pipe dream, leaving Apple to navigate the uncertainty surrounding Trump’s trade wars.
As part of the Apple announcement, the investments will be about bringing more of its supply chain and advanced manufacturing to the US.
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Apple’s new pledge comes just a few weeks after it forged a $500m deal with MP Materials, which runs the only rare earths mine in the US. That agreement will enable MP Materials to expand a factory in Texas to use recycled materials to produce magnets that make iPhones vibrate.
Speaking on a recent investors call, Cook emphasized that “there’s a load of different things done in the United States”. As examples, he cited some of the iPhone components made in the US, such as the device’s glass display and module for identifying people’s faces and then indicated the company was gearing to expand its productions of other components in its home country.
“We’re doing more in this country, and that’s on top of having roughly 19bn chips coming out of the US now, and we will do more,” Cook told analysts last week, without elaborating.
Despite Apple’s struggles with looming tariffs and concern from investors over its lag in fully embracing artificial intelligence, the company’s latest earnings report showed that it made huge gains in iPhone sales and easily beat Wall Street’s expectations for its year-over-year revenue. Apple’s stock, which was down double digits so far this year, spiked upward over 5% on Wednesday following news of Trump’s announcement.