When Trump bites the Apple

Apple CEO Tim Cook has performed admirably in corporate diplomacy with the Trump administration over the past decade
| Photo Credit:
LEAH MILLIS

When Tim Cook, the CEO of Apple, was leaving India in April 2023 after a five-day tour, he exclaimed that he was eager to come back. The tech giant was eyeing India’s massive market and expanding middle-class to boost sales and maybe make it a home base to produce millions of Apple products.

In an effort to lessen its dependency on China, where around 90 per cent of its flagship smartphones are produced, Apple has actually been increasing production in India with the goal of producing about 25 per cent of all iPhones worldwide in the next few years. Apple produced an estimated $22 billion worth of iPhones in India between April 2024 and March 2025, a 60 per cent increase from the year before.

However, US President Donald Trump has now jumped into the scene. He stated last week in Doha that he didn’t want Apple to manufacture goods in India. Trump declared, “India can take care of themselves… we want you to build here [in the US].” To what extent should Trump’s covert threat worry India about the potential for a significant investment loss? Of course, to a certain degree. However, undoubtedly, Apple would be more worried about where they could locate competitive manufacturing.

Without a doubt, Apple serves as a barometer for US tech stocks. According to a 2019 Wall Street Journal article, during his first term, while Trump was formulating his tax-cut plan in 2017, Tim Cook told him that Apple would boost US spending if it was allowed to repatriate $250 billion in overseas cash at a reduced tax rate. In a brief letter to US Trade Representative Robert Lighthizer, the company stated that “US tariffs on Apple’s products would result in a reduction of Apple’s US economic contribution” and “weigh on Apple’s global competitiveness.”

Apple was successful in persuading the government to exempt a class of high-tech goods. In fact, Trump hailed “Tim Apple” in 2019, who has “brought a lot of money back into our country.” In an effort to create more favourable outcomes for both parties, Trump and Cook have kept their relationship amicable.

To increase its production capacity, in the recent past, Apple has turned to countries like Vietnam and India after spending decades developing its supply chain in China. However, analysts largely concur that, given the final product’s pricing, it would be extremely unlikely to move iPhone production to the US. A US-made iPhone might cost $1,500 to $3,500 — maybe closer to the upper bound of that interval — which is much more than the current $1,000 price tag. Furthermore, it’s undoubtedly not in Trump’s best interests for iPhone pricing to double during his presidency.

Multiple angles?

So why does Trump continue doing this? Is it a component of a greater plan? And are there multiple angles too?

Trump’s demand that Apple halt its manufacturing in India may be a component of his strategy to “squeeze” more investments into American manufacturing from the tech behemoth. Trump was alluding to Apple’s February 2025 announcement of a $500 billion investment in the US. Also, note that Cook recently issued a warning that Apple would incur an additional $900 million in the quarter starting in June as a result of Trump’s tariffs on China, which were at 145 per cent at the time. The high tariffs, thus, offer Trump some edge, even though the tariff for China has now been reduced to 30 per cent.

Additionally, Trump mentioned Washington’s wider trade connections with India when he made the remarks regarding the American tech giant. Well, Scott Bessent, Trump’s Treasury Secretary, implied in April that Trump had employed the tariffs to gain as much bargaining leverage as possible. “This was his strategy all along,” Bessent said.

Therefore, Trump biting Apple could have put the tech giant on the verge of a paradise lost. It’s a bit like a game of chicken, where each player is testing how willing the other is to give in. In game theory, it refers to a situation of escalating confrontation. Despite his support of Hillary Clinton in the 2016 election and clashes with the Trump administration on some issues like immigration, Cook has taken care to cultivate ties with Trump and his family thereafter. Overall, Tim Cook has performed admirably in corporate diplomacy with the Trump administration over the past decade, both during the first and current terms. He may have a challenging task ahead of him, though.

The writer is Professor of Statistics, Indian Statistical Institute, Kolkata

Published on May 21, 2025

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