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President Donald Trump has threatened Apple with a 25% tax if it does not manufacture its iPhones in the United States, increasing pressure on the tech giant to secure more local production.
"I have long ago informed Tim Cook of Apple that I expect their iPhone's 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 said in a Facebook post on Friday, April 12. "If that is not the case, a Tariff of at least 25 percent must be paid by Apple to the US"
US equities futures fell to session lows following Trump's declaration and threat to levy a 50% tax on products from the European Union beginning on June 1. Nasdaq 100 futures led the slide, with Apple shares falling as much as 4% in pre-market trading.
The president's demands for US-based production present a significant challenge to the corporation, whose supply chains for popular phones have been centered in China for many years. The United States lacks the vast network of Apple suppliers, manufacturing, and engineering know-how that is now exclusively available in Asia.
Apple, which has become a regular Trump target, did not immediately react to a request for comment on the president's threats. Earlier this month, the business warned that tariffs will result in $900 million (approximately Rs. 7,674 crore) in additional expenditures for the current quarter.
During his trip to the Middle East last week, Trump said he requested Apple CEO Tim Cook to avoid developing factories in India to manufacture devices for the US, urging the iPhone company to increase local manufacturing as it shifts away from China.
"I had a little problem with Tim Cook yesterday," Trump remarked of their talk. "He is building across India. I do not want you building in India."
Apple announced earlier this year that it plans to invest $500 billion (roughly Rs. 42,63,505 crore) in the United States over the next four years, including work on a new server manufacturing facility in Houston, a supplier academy in Michigan, and additional spending with its existing suppliers in the country.
However, this falls short of Trump's goal of completely shifting production to the United States. Moving production of its iconic iPhone and other products to the United States would be a massive task for the Cupertino, California-based corporation.
Apple's largest FATP facilities — which stand for final assembly, test, and pack-out — are vast and inaccessible to many people outside of Asia. They are nearly like towns, with hundreds of thousands of people, schools, gyms, medical facilities, and dorms. One main iPhone plant, located in Zhengzhou, has even been called iPhone City.
Apple's Silicon Valley facilities continue to be where new iPhones and other devices are developed. However, collaboration with Asian component suppliers and other partners begins far before a product is launched. Apple engineers and operations specialists collaborate with Foxconn Technology Group, Pegatron Corp., and other vendors for months or years to customize the assembly of new gadgets.
One frequent counterclaim is that Apple could utilize its financial reserves to purchase hundreds of acres in the United States and establish a completely robotic and automated iPhone production factory. That would eliminate all human-related difficulties in the production process, but supply chain experts argue it is unrealistic owing to constantly shifting needs. Additionally, much of the production equipment is built in China.
The president's escalating pressure on Apple in recent weeks contrasts with his first term, when Cook used a personal connection with Trump to secure tariff exemptions for Apple products. For Wall Street investors, it implies concern about the impact of Trump's trade strategy on one of the world's most valuable firms.
"It's a red flag for me that Trump continues to single out Apple and seems to have something against them," said Randy Hare, Huntington National Bank's director of equity research. "It doesn't mean that Trump is going to do anything more, but you can't predict what's going to happen, and that makes me cautious."
Cook was one of several high-profile tech leaders and billionaires who sought to recruit Trump after his stunning election victory in November.
The Apple CEO has visited Trump's Mar-a-Lago resort in Florida for a number of private meetings and meals. He also sat behind the president at his inauguration in January, with Elon Musk, Google's Sundar Pichai, Meta Platforms' Mark Zuckerberg, and Amazon.com founder Jeff Bezos.
