Trump demands 25% tariff on any iPhone not made in the US

President Trump continues to emphasize that Apple must make the iPhone in the United States, or a steep import tariff will continue to be applied to the company.

Tim Cook previously managed to secure significant tariff exemptions from Trump, even if they were officially only temporary. Now, following Trump's telling Cook to build iPhones in the US instead of India, Apple is being threatened with what appears to be a brand new tariff.

Now Trump has announced on his Truth Social platform that there will be a penalty if Apple does not move manufacturing to the States.

It's curious that Trump claims to have informed Cook long ago, but perhaps more significant is who he says will pay the tariff. The White House has continued to maintain that it is foreign countries who pay the tariffs, but Trump has here acknowledged that it would be the US business.

Apple has not commented on either this new announcement. They have also not commented on Trump's previous remarks about its expansion in India.

It's not clear if the stated 25% tariff is on top of current tariffs against the various countries that Apple can import iPhones from, or a replacement — but the former is more likely given previous statements and tariff actions made in this administration. There is also currently an investigation into the national security implications of semiconductor manufacture, which is expected to conclude with a further tariff.

As with previous Trump announcements, the stock market is continuing to be volatile. In pre-market trading, at time of writing and after the post on social media, AAPL shares were down 3.44%.

What happens next

Apple cannot make the iPhone in the US — there is not the required skilled labor, there is not a supply of the rare minerals needed, and there are no facilities. Trump's belief that it is possible is political posturing, as is commerce secretary Howard Lutnick's bizarre claim that Apple just needs robot arms.

Consequently, the "reciprocal" tariffs that were purportedly intended to drive manufacturers back to the US, have instead just profited other countries. Firms including Apple have been reshoring their supply and distribution to have devices come to the US from those countries that are the least affected by tariffs.

Every country is affected, there are no regions where the tariffs do not affect Apple and its suppliers. But Apple expected to spend $900 million in its June quarter, solely on these efforts to minimize the impact of Trump's tariffs.

Revealing this sum during the last earnings call, Tim Cook also stressed that it was calculated assuming there would be no more tariffs. It wasn't that Apple didn't expect further tariffs, just that it was impossible to assess what they could be.

Now Apple has been told that it must pay a quarter of the value of each iPhone that is imported, regardless of where they come from. This doesn't mean that Apple's reshoring has necessarily been wasted, as it's far from clear whether other country tariffs will also be applied.

Nonetheless, even if Apple has not budgeted for this extra tariff, it won't change the overall situation. Even if it were physically possible for Apple to move manufacturing over to the US, it would remain cheaper to pay the tariff than to build up the facilities and train enough staff.

Such a manufacturing move would take many years to complete, too, during which Apple would presumably still have to pay this new tariff.