Apple needed a win badly, and it just got one. The iPhone maker is setting the blueprint for how U.S. companies can avoid the threat of President Donald Trump’s tariffs but it might only be a temporary reprieve.
In exchange for an additional $100 billion in U.S. investment, Apple looks set to escape Trump’s planned 100% tariff on imported chips. More importantly, Apple devices made in India are currently excluded from
levies and the company is bringing individual component manufacturing stateside, meaning CEO Tim Cook should be able to sidestep demands for a “made-in-USA” iPhone.
It’s a path being followed by others. Chip companies Taiwan Semiconductor Manufacturing, Samsung Electronics, and SK Hynix will be exempted from the semiconductor tariff as well, according to Taiwanese and South Korean officials. Each has promised to spend billions on American facilities.
Who are the losers? Japanese chip makers are under pressure to ramp up their own U.S. spending. And Intel looks sidelined in Trump’s plans to boost domestic semiconductor manufacturing, despite speculation about a government-brokered deal for investment from Taiwan Semiconductor.
But over time, the companies weaving their way round tariffs will still feel a burden. Apple has vowed a total of $600 billion in U.S. investment over four years—even for a company that large, it won’t be easy. It might even have to cut back on its huge stock buybacks. Companies such as Taiwan Semiconductor have to offset their costs—its American-made chips are set to be 5%-20% more expensive than those manufactured in Taiwan, according to its customers.
For now,
Apple’s Cook can bask in the warmth of Trump’s approval. But reshaping supply chains will add costs that go far beyond the term of the current administration—good politics doesn’t always make for good business in the long run.
—Adam Clark
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President Vows 100% Chip Tariffs as Apple Ups U.S. Investment
Apple CEO Tim Cook joined President Donald Trump in the Oval Office to announce an additional $100 billion commitment to the U.S. by the iPhone maker, including new factories and data centers.
During the meeting, Trump said he would slap 100% import tariffs on chips that aren’t made in the U.S.
- Cook’s promised U.S. investment is now $600 billion. While its devices are made overseas now, especially in Asia, it is working with suppliers to accelerate manufacturing in the U.S. One of the other companies in this
program is Corning, maker of glass for notebook computers, desktops, and televisions.
- Apple will produce all of the cover glass for iPhone and Apple Watch in Corning’s Harrodsburg, Ky., facility. Trump said the tariff on chips would not apply to products made by companies that are building manufacturing capabilities in the U.S., but he didn’t say when the tariffs on products from outside the U.S. would start.
- Apple also said it plans to hire 20,000 people in the U.S., with the majority of the new jobs to focus on research and development, silicon engineering, software development, and artificial intelligence. It outlined this when it unveiled its initial $500 billion investment in February.
- Currently, most of Apple products are temporarily exempt from the heftiest tariffs amid the Commerce Department’s ongoing investigation, which allows the U.S. government to look into whether imports of certain products are a threat to national security.
What’s Next: Apple has moved a lot of its iPhone production to India from China, though products from India now face an additional 25%U.S. tariff because the country buys oil from Russia. Trump’s so-called reciprocal tariffs on imports from around the world, set at varying rates, kick in today.
—Angela Palumbo, Anita Hamilton, and Liz Moyer
Government Data Collection Becoming ‘Slow Moving Trainwreck’
Concerns about the ability of U.S. statistical agencies to produce timely, reliable
economic data have been mounting for years even before the Bureau of Labor Statistics provoked President Donald Trump’s ire by revising May and June jobs numbers sharply lower. Economists say it has nothing to do with politics.
- The agencies have grappled with lower survey response rates and budget shortfalls for more than
a decade, which has hindered their collection and analysis of economic data. BLS has had to rely more frequently on estimates and models. Budget and personnel cutbacks have added to the strain.
- There is no quick or obvious fix for these longstanding problems, but nor do most economists consider the data unreliable or otherwise suspect. Still, Erica Groshen, senior economics advisor at Cornell University and a former BLS Commissioner, calls the challenges facing the Bureau a “slow-moving
train wreck.”
- At some point, she says, “there will be a problem” with worsening U.S. economic data quality if statistical agencies aren’t empowered to develop new ways to collect and analyze data. President Trump, in firing Erika McEntarfer as BLS Commissioner, called last Friday’s weak jobs report “rigged” and partisan.
- Much of the economic data generated in the U.S. is based, in part, on surveys of businesses and consumers. The BLS draws on the “establishment” survey of 121,000 businesses and government agencies, for example, to calculate the monthly change in payrolls.
What’s Next: Government economic data underpin Social Security benefits and many pension payments and also guide bond pricing in the market. Increased uncertainty about data accuracy could result in higher nominal bond yields, says USC professor Rodney Ramcharan. For more on this read here.
—Megan Leonhardt
Firefly Aerospace Launches IPO Above Expectations
Firefly Aerospace’s Blue Ghost lunar lander successfully touched down on the moon in March. Now the commercial space company faces another big challenge: Trying to convince Wall Street that its stock could be the next
IPO moonshot. It is riding the surging interest in space and defense companies.
- It already surpassed expectations, pricing its initial public offering at $45 a share for a $6.4 billion valuation. That was above the projected range, which had already been raised before. It also sold more shares than originally planned. The
stock begins trading today on the Nasdaq.
- Firefly isn’t profitable, and its revenue is relatively small. But it has a
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