Trump Threatens 25% Tariffs on Apple | Bloomberg Technology 05/23/2025
>> FROM THE HEART OF WHERE INNOVATION, MONEY, AND POWER COLLIDE IN SILICON VALLEY AND BEYOND, THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. >> LIVE FROM BLOOMBERG NEW YORK, THIS IS BLOOMBERG TECHNOLOGY. PRESIDENT TRUMP YET AGAIN THREATENING A 25% TARIFF ON APPLE IF THEY DON'T PRODUCE THE DEVICES IN THE UNITED STATES. SHARES DOWN 2.7% WE BRING IN ANALYSIS. WE HAVE SEEN TIM COOK IN THE LINE OF FIRE FROM DONALD TRUMP FOR AT LEAST A WEEK NOW FROM DONALD TRUMP.
HOW DOES HE RESPOND? >> THIS IS A TOUGH ONE BECAUSE THE PRESIDENT IS UP HERE. WE SING -- HE SINGLED HIM OUT AND HE NOTED COOK'S ABSENCE DURING A FORUM WITH OTHER CEOS IN RIYADH WHERE HE CALLED OUT TIM COOK, TIM COOK, DO I SEE? I DON'T THINK TIM IS HERE. LATER, HE POINTED TO APPLE'S INTENTION TO MOVE SOME OF ITS CHINA-BASED IPHONE PRODUCTION TO INDIA TO AVERT WHAT WOULD BE HIGHER COSTS RELATED TO TARIFFS AND GOODS COMING FROM CHINA. TRUMP WANTS TO SEE SOMETHING DIFFERENT.
HE WOULD LIKE TO SEE APPLE MOVE HERE. WHATEVER TIM COOK HAS PROMISED THE PRESIDENT CLEARLY WASN'T ENOUGH. HE VISITED TRUMP AT MAR-A-LAGO AND HAD A VISIBLE SPOT AT THE CAPITOL ROTUNDA ON JANUARY 20 AND WE ARE NOT SEEING FOR TIM COOK THE RESULTS THAT HE MIGHT HAVE HOPED FOR IN THIS RELATIONSHIP WITH THE PRESIDENT. CAROLINE:
SHIFTING MANUFACTURING TO INDIA AND A REPORT THAT THAT INDIA MANUFACTURING FOCUS HAD BEEN DOUBLED DOWN ON IN THE LAST WEEK. SPEAK TO THE RELATIONSHIP WE SEE OF TIM COOK WITH THE U.S. AND INVESTING HERE. HE HAD PROMISED $500 BILLION ALREADY. MICHAEL: HE TALKED ABOUT MOVING IPHONE RELATED TO PRODUCTION HERE AND TRAINING AND OTHER WORKS, BUT IT WASN'T ENOUGH. TRUMP IS ABOUT THE SYMBOLISM.
HE WANTS THE ICONIC PRODUCTS MADE HERE ONE OF THE PROBLEMS IS THE WORKFORCE. DO WE HAVE THE WORKFORCE PREPARED TO DO THE KIND OF HIGH-TECH, HIGH SKILL ASSEMBLY OF THESE PHONES YOU SEE EN MASSE IN CHINA, INDIA, AND VIETNAM AND WE REALLY DON'T. TIM COOK HAS MADE THIS POINT OVER AND OVER AGAIN AS HAVE OTHER CHIEF EXECUTIVES WHEN THEY TOOK ABOUT -- TALK ABOUT BRINGING ANALYSIS -- PRODUCTION TO THE U.S.. IT IS A DIFFICULT MOMENT FOR TIM COOK. THE COST ESTIMATES ARE ALL OVER THE PLACE ABOUT HOW MUCH MORE AN IPHONE WOULD COST IF IT WERE PRODUCED HERE FROM BEGINNING TO END. ONE ANALYST OUT THIS MORNING
SAYING AS HIGH AS $3500 PER UNIT. THAT MAY BE HIGH BUT IT GIVES YOU WHEN IDEA ABOUT HOW MUCH MORE OF A COST THERE MAY BE FOR MOVING PRODUCTION HERE, WHICH IT IS IMPORTANT TO NOTE WOULD TAKE YEARS TO REROUTE ALL OF THE SUPPLY LINES, FIND THAT LAND, ETC. CAROLINE: WELL SAID, MIKE SHEPARD, WE APPRECIATE IT. ANALYSTS CALLING IT AN ABSURD DIRECTIVE. YOU HAVE A BUY RATING ON APPLE AT A $250 PRICE TARGET.
DOES THAT CHANGE IF THEY HAVE TO BRING PRODUCTION TO THE UNITED STATES? >> IT DOES NOT. THIS IS REALLY JUST A MATTER OF TIME FRAMES. IF WE NEEDED TO MAKE AN IPHONE RIGHT NOW IN THE U.S., IT WOULD BE VERY EXPENSIVE. CAN WE DO THIS IN FIVE YEARS?
IF APPLE WAS TO COMMIT TO BRINGING PRODUCTION OF IPHONES TO THE U.S. IN FIVE YEARS AND INVESTED ITS CONSIDERABLE RESOURCES INTO DOING THAT, IT WOULDN'T BE THAT MUCH MORE EXPENSIVE. THAT IS WHAT THE PRESIDENT IS LOOKING FOR AND I'M SURPRISED THAT APPLE IS AT A POINT WHERE THEY ARE NEGOTIATING THIS BADLY THAT THE PRESIDENT HAS TO GO OUT PUBLICLY AND THREATEN THEM. YOU HAVE SEEN OTHER TECHNOLOGY CEOS TO A MUCH BETTER JOB OF GIVING THE PRESIDENT WHAT HE WANTS AND MOVING FORWARD AND MAKING THOSE COMMITMENTS AND I'M SURPRISED APPLE IS CONTINUING TO BE HUMBLED. THIS HAS BEEN A HUMBLING WEEK
FOR APPLE. AT GOOGLE I/O, WE HAVE SEEN THAT GOOGLE IS WAY AHEAD ON AI ON ANDROID, THEN THERE WAS THE EMBARRASSING ANNOUNCEMENT FROM OPENAI, APPLE NEEDS TO DO A BETTER JOB OF NEGOTIATING. IF IT DOES COMMIT TO A LONG-TERM PATH, IT COULD MAKE IPHONES IN THE U.S. AT A COMPETITIVE PRICE. IT DOESN'T HAVE TO DO IT TODAY. CAROLINE: HOW? WE ARE HEARING WE DON'T HAVE THE SKILL SET IN THE UNITED STATES, WE DON'T HAVE THE ECOSYSTEM OF SUPPLY CHAIN HERE. IT HAS TAKEN DECADES TO BUILD IT UP IN CHINA, YEARS TO BUILD UP IN INDIA.
WHAT DO THEY HAVE TO GO ABOUT SORTING HERE IN THE UNITED STATES IN THAT TIMEFRAME? >> THAT IS EXACTLY RIGHT, IT IS A SKILLS ISSUE. BUT IF YOU GIVE THEM FIVE YEARS, WE CAN HIRE INTERNATIONALLY, WE CAN DEVELOP THE SKILL HERE. APPLE IS SITTING ON A BILLION DOLLARS OF CASH AND IT PRODUCES $100 BILLION OF CASH EVERY YEAR. IF THE GREAT THING APPLE NEEDS TO ACCOMPLISH RIGHT NOW IS TO DEVELOP THE SKILL SET DOMESTICALLY SHOULD BE FOCUSING ITS OWN RESOURCES ON THAT. CAROLINE: THE OPPORTUNITY COST OF DIVERTING THAT CASH AWAY FROM R&D, THEY HAVE TO CATCH UP IN GENERATIVE AI AND INTEGRATING IT, BUT INSTEAD HAVING TO FOCUS ON PRODUCTION IN THE UNITED STATES, IS THAT NOT AN OPPORTUNITY COST THAT DOES DRAG DOWN THE PRICE TARGET FOR THE STOCK? >> IT IS A HEADWIND AND THAT IS THE HEADWIND THEY ARE DEALING WITH THIS YEAR. THIS PATH EITHER LEADS THEM TO A SUCCESSFUL OUTCOME.
THAT IS WHY WOULD PEOPLE SAY WILL COST $3500 TO MAKE AN IPHONE IN THE U.S., THAT IS NOT A REAL THING. THEY SAY WE WILL ABSORB THE 25% TARIFF FROM INDIA AND ABSORB IT THROUGH HIGHER PRICES, SLIGHTLY LOWER MARGIN AND PUSH IT DOWN. THIS IS A BETTER JOB OF NEGOTIATING AND THIS IS ABSOLUTELY A DRAG ON THE STOCK, IT HAS BEEN THIS YEAR. UNTIL THEY FIND A PATH FORWARD, IT WILL CONTINUE TO WAIT ON THE STOCK. CAROLINE: IF YOU ARE NOT SAYING IT IS A REAL THING TO ESTIMATE WHAT AN IPHONE MADE IN AMERICA WOULD COST, ARE YOU ANTICIPATING THEY DO STOMACH A 25% TARIFF CONTINUING TO IMPORT? OR DO YOU ANTICIPATE THEY DO GO ABOUT A 3-5 YOUR INVESTMENT PLAN IN THE U.S. WHEN THE TERM OF PRESIDENT TRUMP IS IN FIVE YEARS? >> I THINK THEY NEED TO PROCEED ON BOTH PATHS.
THEY CAN'T MAKE IPHONES IN THE U.S. OVER THE NEXT THREE YEARS. THEY HAVE TO NEGOTIATE THAT TARIFF DOWN OR ABSORB IT IN THE SHORT-TERM, WHICH IS WHAT THEY ARE DOING AND PROCEED ON BOTH PATHS. THIS ADMINISTRATION IS NOT GOING TO BE IN POWER FOREVER. I THINK WE ARE ALSO MINIMIZING THE CHANGES TO MANUFACTURING IN THE U.S. MANUFACTURING IS GOING TO CHANGE DRAMATICALLY OVER THE NEXT FEW YEARS IN THE U.S. FOR A VARIETY OF REASONS BECAUSE LABOR HAS BECOME MORE EXPENSIVE IN CHINA AND TAIWAN, BECAUSE ROBOTICS ARE GETTING THAT MUCH BETTER.
IN A FIVE-YEAR TIMEFRAME AT THE SAME TIME, THEY NEED TO USE THAT AS LEVERAGE AND SAY GIVE US FIVE YEARS TO DO THIS, LET'S TAKE OFF AT 25% ON INDIA BECAUSE WE ARE MAKING A FIRM COMMITMENT TO THE FIVE-YEAR TIMEFRAME AND THAT WILL BUY THEM THE TIME TO FIND GOOD RESOLUTION. THAT IS POSSIBLE AND MR. COOK IS A SKILLFUL ENOUGH NEGOTIATOR THAT HE NEEDS TO BE ABLE TO ACCOMPLISH THAT. CAROLINE:
HOW FRUSTRATING DO YOU THINK IT IS FOR INVESTORS AND TIM COOK TO THINK ABOUT THE INEFFICIENCIES THAT HAVE TO BE BUILT INTO THE BUSINESS MODEL NOW EVEN IF THEY DO BRING OVER COMPONENT BUILDING, IT IS NOT GOING TO BE AN EASY TASK AND THEY ARE LIKELY TO STILL HAVE TO ASSEMBLE IN CHINA OR INDIA FOR THE TIME BEING. >> IT IS A REALITY. I THINK OTHER CEOS ARE IN DENIAL THAT PRESIDENT TRUMP GOT 77 MILLION VOTES AND BELIEVES HE HAS A MANDATE TO MAKE THESE VERY PROFOUND CHANGES TO THE GLOBAL ORDER, INCLUDING CHANGING THE WAY THE GLOBAL SUPPLY CHAIN WORKS. THIS IS NOT GOING TO CHANGE IN THE NEXT THREE YEARS. THIS IS SOMETHING ALL THESE COMPANIES AND BY THE WAY THESE COUNTRIES AND WE HAVE TO ADOPT TO.
WE CAN'T GO BACK AND CHANGE THE OUTCOME OF THE U.S. ELECTIONS. APPLE IS GOING TO HAVE A CHOPPY YEAR FOR SURE AND OTHER COUNTRIES ARE GOING TO HAVE CHOPPY YEARS. MICROSOFT AND AMAZON HAVE HANDLED THIS A LOT BETTER, THEIR BUSINESS IS MORE RESILIENT TO THIS AND THEY SHOULD BE ABLE TO GET THROUGH THE REST OF THIS ADMINISTRATION.
CAROLINE: ALL EYES ON THE POLITICAL NAVIGATION OF TIM COOK NEXT. GIL LURIA, GREAT TO HAVE YOU. A RENOWNED COMPUTER SCIENTIST WILL JOIN US TO TALK ABOUT HIS NEW VC FUND AND THIS TALENT AND SKILL ISSUE. LET'S TAKE A QUICK CHECK ON THE MARKETS AHEAD OF THAT. THE MARKET IS UNDER PRESSURE AS
WE DIAL UP TARIFF ANXIETY. THE SEMI CONDUCTOR INDEX ALSO UP BUT APPLE IN THE LINE OF FIRE. THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: THE BIG NEWS TODAY, IT IS APPLE SHARES TRADING LOWER AS INVESTORS REACT TO SUDDEN TRUMP'S THREAT OF A 25% TARIFF ON THE COMPANY IF IT DOESN'T BRING MORE IPHONE PRODUCTION TO THE UNITED STATES. BUT DOING THAT REQUIRES SKILLS MANY AMERICAN WORKERS DO NOT CURRENTLY HAVE. WE ARE PLEASED TO WELCOME TO
THE SHOW ANDREW NG, WORLD-RENOWNED COMPUTER SCIENTIST, THOUGHT LEADER, AND THE COFOUNDER OF AN ONLINE EDUCATION COMPANY AND HE IS ANNOUNCING HIS SECOND FUND TARGETING AI STARTUPS. WONDERFUL TO HAVE YOUR VOICE ON THE SHOW. BEFORE WE GET INTO THE AI TALENT I WANT TO GET YOUR TAKE ON THE LABOR SKILLS CURRENTLY NEEDED IN THE U.S. FOR THIS MANUFACTURING PIVOT. IF WE WERE TO BRING IPHONE MANUFACTURING TO THE UNITED STATES, COULD WE DO IT IN A NEARER TERM TIMEFRAME? ANDREW: IT WOULD TAKE YEARS TO DEVELOP THE TALENT BASE NEEDED TO BRING ADVANCED MANUFACTURING BACK TO THE UNITED STATES. IT IS IMPORTANT FOR ADVANCED MANUFACTURING TO BE UNDER OUR AND TRUSTED ALLIES' CONTROL. SEVERAL YEARS AGO, I VISITED WISCONSIN WHERE THE FIRST TRUMP ADMINISTRATION AND FOXCONN HAD MADE A CONCERTED EFFORT TO MOVE PANEL DISPLAY MANUFACTURING TO THE UNITED STATES IN WISCONSIN.
FRANKLY, IT WAS A GREAT EFFORT AND IT WAS DIFFICULT TO FIND THE TALENT IN WISCONSIN OR THE U.S. MORE BROADLY WITH ADVANCED MANUFACTURING SKILLS. IT IS NOT PEOPLE JUST ASSEMBLING THINGS WITH THEIR HANDS ANYMORE. CAROLINE: WHERE COULD WE BRING IN FROM? WHERE HAVE YOU SEEN THAT SKILL SET AMONG ALLIES THAT CAN BE BROUGHT IN? IT IS FEELING AS THOUGH WE ARE NOT BRINGING IN TALENT ABROAD FROM THIS MOMENT EITHER. ANDREW:
IN THE CASE OF MANUFACTURING TALENT, CLEARLY CHINA HAS A LOT OF IT. TAIWAN INTERESTINGLY HAS A LOT OF MANUFACTURING TALENT. ALSO JAPAN. I THINK SOME PARTS OF KOREA AS WELL, ESPECIALLY WITH SEMI CONDUCTORS. MANY OF OUR ALLIES DO HAVE SKILLED MANUFACTURING TALENT. IMPORTING THOSE SKILLS TO THE U.S. IS STILL SOMETHING TO BE FIGURED OUT. IN ONE OF THE BEST THINGS THE U.S. COULD DO TO ENSURE U.S.
COMPETITIVENESS IS FRANKLY TO SUPPORT OUR UNIVERSITIES AND SUPPORT HIGH SKILL INTEGRATION. CAROLINE: HOW HAVE YOU BEEN CONSIDERING THE CUTS TO SCIENCE FUNDING IN PARTICULAR? ANDREW: I FEEL LIKE OVER THE LAST MANY DECADES, AMERICA LED THE WORLD IN SCIENCE AND TECHNOLOGY. THIS IS A WORLD WHERE WE HAVE STRONG INSTITUTIONS THAT FUNDED OPEN RESEARCH. ONE THING I THINK NOT MANY PEOPLE FULLY UNDERSTAND IS WHEN THE NATIONAL SCIENCE FOUNDATION FUNDS RESEARCH AND WRITES A RESEARCH PAPER, ANYONE CAN READ IT. IT HELPS OUR ADVERSARIES IN THE WHOLE WORLD, BUT THE COUNTRY IT HELPS THE MOST IS AMERICA.
AND YES, OTHER COUNTRIES INCLUDING OUR ADVERSARIES CAN BENEFIT FROM IT, BUT IT HELPS THE COUNTRY THAT DOES THE RESEARCH THE MOST. AMERICA'S ABILITY, I WAS AN INTERNATIONAL STUDENT MYSELF ON AN F-1 VISA. I HAVE STAYED TO HOPEFULLY MAKE SOME POSITIVE CONTRIBUTIONS.
I THINK IMMIGRATION WOULD BE AN IMPORTANT PIECE FOR AMERICAN COMPETITIVENESS. CAROLINE: LET'S TALK ABOUT YOUR POSITIVE CONTRIBUTION TO RAISE AI TALENT FOR STARTUPS. WHAT SECTORS ARE YOU LOOKING AT AND ARE THE U.S. BUILD COMPANIES ALONE? ANDREW:
THE MAJORITY OF THE COMPANY'S WE BUILD ARE IN THE U.S. BUT WE ALSO ARE WORKING WITH JAPAN, KOREA, AND TAIWAN. I DON'T WANT TO BE COMPETING FOR WE ARE WRITING CODE BECAUSE MY TEAM IS FORTUNATE TO BE CLOSE TO AI TECHNOLOGY, WE BRING AI TALENT AND APPLY OUR TECHNICAL EXPERTISE. CAROLINE: COMEBACK IS THAT PORTFOLIO CONTINUES TO GROW. CONGRATULATIONS ON THE NEW FUND. ALSO THE FOUNDER OF DEEP LEARNING AI IN THE COFOUNDER OF COURSE SARAH. STICKING WITH ARTIFICIAL INTELLIGENCE, ANTHROPIC IS ROLLING OUT TWO VERSIONS OF ITS SOFTWARE. THIS IS AS THE START UP IS
ADVISED TO STAY AHEAD OF A CROWDED MARKET. MIKE JOINED THE CHIEF PRODUCT OFFICER EARLIER. >> OUR ONLY CONSTRAINT WAS WE WANTED IT TO BE AVAILABLE TO AS MANY PEOPLE WHO WANTED IT ON THE LAUNCH DATE. IN TERMS OF BEING GENERALLY AVAILABLE, IT IS DAY ONE.
CAROLINE: COMING UP, TECH IPOS, ARE THEY BACK? THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: AS THE BROADER MARKET SELLS OFF, THE SUCCESSES GIVING HOPES TO OTHER STARTUPS THAT HAVE BEEN WAITING TO GO PUBLIC FOR MANY YEARS. ONE OF THE LARGEST PRE-IPO PLATFORMS FOR PRIVATE SHARES. ARE WE SEEING THE CREAKING OPEN? IS IT COMPANIES THAT HAVE TO COME TO THE MARKET OR ARE WE GOING TO SEE COMPANIES THAT JUST WANT TO COME IN THIS ENVIRONMENT? >> IF YOU HAD ASKED ME A FEW WEEKS AGO WE WOULD WE BE SEEING POSITIVE IPO ACTIVITY RIGHT NOW I WOULD HAVE SAID NO BUT THESE FEW COMPANIES THAT DECIDED TO GO OUT LAST WEEK ARE PERFORMING WELL AND ARE OUTPERFORMING THE MARKET. WE ARE NOT IN A MARKET ENVIRONMENT WHERE WE WILL SEE THE FLOODGATES OPEN UP. DESPITE THE VOLATILITY THERE IS. CAROLINE:
CORLEY OUTPERFORMING. YOU'VE GOT AN AI FOCUS AND SERVICES AND CONSUMER FOCUSED IS THIS IS. COULD WE EVEN GO INTO BROADER HARDWARE AND DEEP TECH? >> I THINK WE CAN. THERE ARE OTHER NAMES ON OUR RADAR. YOU HAVE FINTECH, HEALTH TECH.
THESE ARE OLDER COMPANIES. THERE IS A LOT OF INVESTORS AND THESE ARE IN COMPANIES AS WELL. THEY ARE ALMOST THERE. IT SEEMS LIKE MAYBE THAT IS NOT A REQUIREMENT NOW FOR PUBLIC MARKET INVESTORS WHEN YOU ARE ACHIEVING 35% PLUS GROWTH RATES.
THERE IS A SIMILAR STORY WE ARE SEEING ACROSS THE SECTORS. THESE HAVE BEEN DOWN AROUND IPOS. BOTH RAISING AT VALUATIONS BELOW THEIR LAST ROUND OF PRIVATE FUNDING AND ESPECIALLY FOR A LOT OF THESE COMPANIES THAT LAST RAISED. JUST SOME COMMONALITIES YOU MAY EVER SEE IN THE MARKET. CAROLINE: LIQUIDITY FOR EMPLOYEES HAS BEEN THERE FOR A LONG TIME. IT IS GETTING FAR EASIER IN THE SECONDARY MARKET, RIGHT? >> ABSOLUTELY. THE VC ECOSYSTEM IS THAT THIS
REALLY INTERESTING AND ACTION POINT WHERE USED TO RAISE CAPITAL FROM LPS. HAVE EXITS AROUND THE TIME HORIZON. RINSE, REPEAT. THE CRUCIAL EXIT AT THE 10 YEAR TIMELINE PIECE IS NOT HAPPENING AND THAT IS DRIVING MORE SECONDARY AT THE. YOU SAW PRECURSOR VENTURES THAT THEY EXPECT 75% TO 80% OF DISTRIBUTIONS TO LPS TO BE FROM SECONDARIES AND THAT IS A HUGE NUMBER AND IT REALLY SPEAKS TO THE LIQUIDITY CRUNCH WE ARE SEEING IN THE VENTURE MARKET.
CAROLINE: BRIEFLY, WE HAVE SEEN AN INTERESTING TECH FOCUS TO BE ABLE TO BUY MORE ON THE SECONDARY MARKET, MAYBE THE PUBLIC MARKET. >> ABSOLUTELY. WE HAVE SEEN THIS TREND OF MORE VC'S REGISTERING AS RAA'S. THAT ALLOWS THEM MORE
FLEXIBILITY. IN PUBLIC COMPANIES AND SECONDARY. WE TALKED ABOUT THE SECONDARY NEED ON THE SELL SIDE. THERE IS ALSO A SECONDARY NEED ON THE BUY SIDE.
THESE AI COMPANIES , THEY ARE LOOKING TO THE SECONDARY MARKET TO EITHER BUILD OR ESTABLISH INVESTMENTS. CAROLINE: GREAT TO CATCH UP WITH YOU. MEANWHILE, WE CHECK BACK ON THE BIG STORY OF THE DAY.
APPLE SHARES LOWER. WILL WE SEE A 25% TARIFF IF
2025-05-27 22:25
