How Apple could placate Trump
The long weekend was dominated by whispers of the growing public fissure between President Trump and Tim Cook. The Apple chief, who seemed to have mastered how to stay in the president’s graces for years, had become a target.
“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 declared on social media last week.
The question echoing through Silicon Valley, Wall Street and Washington is simple: What’s the off-ramp? How can Cook avoid a full-blown battle that could cost Apple hundreds of billions of dollars in market value and wreak havoc on its finely tuned global supply chain?
I spent the past couple of days talking to industry executives, analysts and investors. Here are several ways Apple could placate Trump without fully upending its business.
First, a caveat: Moving iPhone production to the U.S. quickly — as in, within the next several years — is nearly impossible. Analysts estimate that could increase the price of an iPhone to $3,500, making them prohibitively expensive and most likely harming the company and its shareholders.
This isn’t just about a few wealthy investors, either. Apple is one of the most widely held stocks in the world. Over 7,600 institutional owners, including virtually every major mutual fund and E.T.F., own Apple shares.
Forget for a moment whether Cook should fight. (Many in Silicon Valley believe that he has a moral obligation to do so.) The reality is that taking on the most powerful man in the world carries huge risk.
Here’s a thought experiment: Cook could announce plans to begin assembling some iPhones in the U.S. within three years, and lay out a detailed road map to make more of them — or their successor devices — over the next decade. That would give Trump a tangible win: Apple devices would effectively say, “Assembled in the USA.”
This could probably begin at Apple’s existing facility in Texas at little extra expense. “The cost of an iPhone to Apple would be digestible and likely result in iPhones in the $1,500 range instead of $3,500,” Dan Ives, an analyst at Wedbush Securities, told me when I presented him with the idea.
The analogy in manufacturing, often made by industry experts, is that “American-made” often means “American-assembled,” using global components. This is a crucial distinction and, depending on Trump’s mood, a palatable one.
Apple could also announce a public-private partnership to invest in skilled workers in the U.S., starting at the Texas plant, to train the work force needed to make the iPhones of the future.
“Manufacturing costs and skilled labor to produce the iPhone are the real obstacles. It’s not just a Trump threat and a snap of the fingers that’s going to make this happen,” Ives said. “The U.S. government needs to play a role to make this herculean strategic move a reality.”
This would give Apple critical time to plan — and possibly an opportunity to pivot if the geopolitical climate shifts — or if the technology itself drastically changes. After all, Apple’s own Eddy Cue mused this month that “In 10 years, people might not even need an iPhone.”
The art of the deal, it seems, sometimes demands a long game.
HERE’S WHAT’S HAPPENING
Markets rebound on President Trump’s latest tariff reprieve. S&P 500 futures and European stocks are up after Trump delayed imposing 50 percent tariffs on E.U. imports until July 9 to allow more time for Brussels to negotiate a trade deal. But both sides are far apart, and tensions look to be fraying. Christine Lagarde, the European Central Bank president, accused Trump of using “terrible language” to disparage the political and economic bloc.
The Trump administration plans to cut remaining ties to Harvard. Federal officials intend to tell agencies to cancel any remaining federal contracts with the school, worth an estimated $100 million, The Times reports. It’s another blow by the administration against Harvard, and it comes after Trump suggested on social media that the $3 billion in frozen federal funding earmarked for the university could be sent instead to “TRADE SCHOOLS all across our land.”
A.I., inflation and oil are high on the agenda this week. On Wednesday, Nvidia reports quarterly results, providing details on how the chipmaker powering the artificial intelligence boom is reckoning with demand and trade-war fallout. After a rocky stretch for government debt investors, the Treasury will hold multiple auctions this week. The Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, is set for release on Friday. The OPEC Plus cartel is expected to meet on Saturday, amid speculation that oil producing countries will again bolster supply.
More unexpected hits from the budget bill
As the Senate takes up the budget bill recently passed by the House, more details are emerging about what the proposal includes. Here’s the latest.
Professional sports team owners could lose out on a tax break. Under the House bill, they would be able to deduct only half the value of their teams’ intangible assets — including player contracts, media rights, sponsorships — over 15 years, instead of the full amount, according to The Times.
The legislation would apply to future owners, but could hurt current ones if the red-hot demand for sports teams cools. N.F.L. owners were briefed on the change last week and were encouraged to press senators to drop the provision.
There’s potential retaliation against countries whose taxes the U.S. opposes. The House bill would increase federal income taxes on passive U.S. income, including dividends and interest, on investors based in certain countries like Britain and Canada.
It appears to take aim specifically at jurisdictions that impose taxes the Trump administration doesn’t like, such as digital service taxes on tech giants or those that use provisions for minimum corporate taxes allowed by a multinational treaty.
Some Republican senators made clear they want big changes. Senator Rand Paul of Kentucky reiterated that the House bill would explode the federal debt. “The math doesn’t add up,” he told “Fox News Sunday.”
Senator Ron Johnson of Wisconsin, who wants to cut federal spending to prepandemic levels, accused House Republicans of having “rushed this process.” He told CNN’s “State of the Union” that enough senators object to the legislation “to stop the process.”
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Here’s how some universities plan to avert the potential major endowment tax hit packed into the new Republican spending bill.
A crystal ball for antitrust under Trump?
The Trump administration has promised a deregulatory agenda, with a lighter touch than the previous White House.
If you’re curious what that could look like, see what the three Republican commissioners of the F.T.C. (President Trump fired its two Democratic commissioners) did last week: They dismissed a Biden-era antitrust lawsuit against PepsiCo.
A recap: In January, the F.T.C. filed an unfair pricing case against the packaged food giant under a long-dormant antitrust law. The company favored Walmart over other vendors, the agency argued, a violation of the 1936 Robinson-Patman Act that prohibits sellers from offering preferential prices to some buyers.
The Biden administration also accused the biggest alcohol distributor in the United States of unjustifiably charging higher prices to small businesses.
Withdrawing the case has made waves in antitrust circles. Critics of the PepsiCo lawsuit called it “legally dubious.” Lina Khan, under whom the agency filed the lawsuit, called its decision to drop the case “disturbing” and “a gift to giant retailers.”
It is “a fundamental abandonment of the commission’s responsibility to ensure a level playing field for small businesses,” Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, a nonprofit advocacy group, said in a statement.
PepsiCo said in a statement that it was “pleased with the F.T.C.’s further consideration and withdrawal of this matter.”
Republican commissioners say the complaint was flawed. Andrew Ferguson, the Trump-appointed F.T.C. chair, called the lawsuit “a nakedly political effort to commit this administration to pursuing little more than a hunch that Pepsi had violated the law.”
Melissa Holyoak, another Republican commissioner, has been similarly critical. Mark Meador, the third Republican commissioner, who supports reviving enforcement of the Robinson-Patman Act, said this lawsuit lacked “intellectual rigor.”
The move might speak to regulatory priorities under Trump. In a filing last week, the F.T.C. and the Justice Department took on the Wall Street giants BlackRock, State Street and Vanguard in an effort that seemed as much about hitting the fund managers for their focus on E.S.G. as it did about antitrust. That, combined with the PepsiCo withdrawal, could indicate a heightened focus on cultural issues, DealBook hears.
All of this comes as the Democratic commissioners Rebecca Kelly Slaughter and Alvaro Bedoya are still fighting their firings, urging a federal judge to find their removals illegal.
ICYMI
Today’s talker: President Emmanuel Macron of France started his tour of Southeast Asia in rocky fashion. Upon landing in Vietnam on Sunday, he is seen getting shoved in the face by his wife, Brigitte Macron.
A crypto kidnapping
It sounds like a scene from “Reservoir Dogs,” recast for the crypto age: An Italian man was abducted and held in a swanky Manhattan townhouse, where he said he was tortured for weeks. His captors were apparently after his Bitcoin password.
The episode raises further questions about the safety of those who have made a fortune in digital currencies.
What happened: The victim told the police that he had been shocked with electric wires, beaten with a gun and dangled from a ledge of the downtown luxury townhouse. But attempts to get him to cough up his password all failed.
The man eventually escaped, and hailed a traffic agent.
Several suspects have been arrested. The police have charged John Woeltz, 37, a Kentucky man, and Beatrice Folchi, an Italian woman.
The foiled heist adds to a global wave of violent crypto-related crimes. There have been more than two dozen such attacks this year, according to Jameson Lopp, a crypto security specialist.
In France, it’s become something of a national security issue. Several episodes, including a brazen kidnapping attempt in Paris that was recorded, have shocked the country and the crypto sector. Bruno Retailleau, the country’s interior minister, vowed to step up protections for its crypto business leaders.
Security specialists and crypto boosters see a pattern. Many of the victims flexed their wealth in photos posted to social media. That’s risky, Mikko Hypponen, a research specialist at the software company WithSecure and a cybercrime adviser to Europol, told DealBook.
“Someone’s going to break into your home if you keep posting about how much money you have,” he said.
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Elsewhere: Trump Media & Technology Group reportedly plans to raise $3 billion to buy digital currencies.
THE SPEED READ
Deals
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Inside the campaign by David Solomon of Goldman Sachs to silence internal critics. (WSJ)
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A Dutch pension fund signaled that it would re-evaluate doing business with U.S. money managers who “align their interests and their policies” with the Trump administration. (Bloomberg)
Politics, policy and regulation
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Mark Zuckerberg has been in Washington a lot since President Trump’s return to office. He’s had little to show for his support of the administration so far. (Bloomberg Businessweek)
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“Trump Allies Look to Benefit From Pro Bono Promises by Elite Law Firms” (NYT)
Best of the rest
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Tesla’s sales cratered in Europe last month while Chinese rivals, including BYD, have gained market share in the region. (Bloomberg)
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The battle between private equity firms and Wall Street banks to recruit new college graduates is heating up. (FT)
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“The Newark airport crisis is about to become everyone’s problem” (The Verge)
We’d like your feedback! Please email thoughts and suggestions to [email protected].
Andrew Ross Sorkin is a columnist and the founder of DealBook, the flagship business and policy newsletter at The Times and an annual conference.
Bernhard Warner is a senior editor for DealBook, a newsletter from The Times, covering business trends, the economy and the markets.
Sarah Kessler is the weekend edition editor of the DealBook newsletter and writes features on business.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
Danielle Kaye is a Times business reporter and a 2024 David Carr Fellow, a program for journalists early in their careers.
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