Trump’s Tech Bros: Can Tim Cook save Apple from the trade war?

0:00AI has opened infinite possibilities for customer experience and endless complexity because piloting AI tools is easy. Making them work together across a global enterprise is something else entirely. Nice is the CX AI platform that runs customer experience at scale, uniting agentic agents, human agents, and customer intelligence. So the world's leading brands can move forward with confidence. Nice, the proven CX AI leader. Learn more at nice.com. So Tim Cook is hired in April 1998, and the first time he holds a meeting for his worldwide managers, this meeting's usually 90 minutes, maybe two hours.

0:40It runs for 13 hours. This is a man who is maniacal. That's EFT's Patrick McGee, talking about Apple chief executive Tim Cook. I talked to someone who works for both Tim Cook and Steve Jobs, and they would say, Steve Jobs is difficult to work with because emotionally he would go from zero to 100 in a matter of seconds. Tim Cook was difficult because he would go from 35 to 36. He would just leave you sitting there wondering if you had made your point.

1:07Murad Ahmed: It's a management style that has delivered. Over the past 15 years, Cook has developed a remarkable ability to know exactly what he wants for his company and exactly how to get it. There's zero tolerance for defects and a strategy of perfection. That strategy of perfection took Tim Cook and Apple to China. He's built a massive network of factories and suppliers that make Apple's products and ship them back to the US. Cook masterminded that move, and it's considered both his greatest achievement and the reason he was chosen to succeed Steve Jobs. But now Apple's reliance on China has become a big problem for Cook.

1:44We're talking about the iPhone now, and, you know, the iPhone, if they're going to sell it in America, I want it to be built in the United States.

1:53Murad Ahmed: Since his return to the White House in January, Donald Trump has made it clear to US companies he wants to bring manufacturing home. His message to Apple, the iPhone needs to be made in America. And he's threatening huge tariffs if he doesn't get his way. The US president is now threatening a 25 % tariff on Apple unless iPhones start being made in the United States.

2:24Murad Ahmed: This is Tectonic from the Financial Times. I'm Murad Ahmed, the FT's technology news editor. And in this season of the podcast, I'm exploring the relationships between Donald Trump and some of the titans of the tech world. What's really driving those relationships? How are they playing out? And what might they mean for the future of the tech industry in the US and around the world? In this episode, can Tim Cook save Apple from Trump?

2:56Applause for leaders on both sides of the aisle. And as President Trump enters this room... Please remain standing for the honours and the invocation.

3:04Murad Ahmed: Let's go back to that freezing cold day in January in Washington, D.C. Trump's inauguration, 2.0. Members of Congress, their spouses, and of course, as we mentioned, VIPs... There in the Capitol Rotunda was President Trump, surrounded by family members and former presidents, and then strategically placed in front of important cabinet picks. There was a collection of tech billionaires, You might even call them Trump's tech grows. We have Mark Zuckerberg. He's one of the many. Oh, we see Jeff Bezos there to the bottom right of your screen. Alongside Mehta's Zuckerberg and Amazon's Bezos was Apple's Tim Cook.

3:40Well, I mean, we just had the cameras trained on Tim Cook there. That's one that actually Trump has said.

3:44Murad Ahmed: In Trump's first stint as president, Cook had earned himself the reputation as the Trump whisperer because of his uncanny ability to keep Apple out of Trump's firing line. He had managed to protect his company from the worst of the president's first trade war with China, carving out exceptions for Apple's products made in Chinese factories. But in his second term, Trump has put tariffs and bringing manufacturing back to the US at the very top of his agenda. I said to Tim, I said, Tim, look, we've treated you really good. We put up with all the plants that you built in China for years. Now you've got to build us.

4:21We want you to build here.

4:22Murad Ahmed: As well as massive duties on goods imported from China, Trump has specifically threatened a 25 % levy on Apple devices made abroad. So does Cook, the supposed Trump whisperer, have the magic words to protect Apple from Trump's trade war? To find out, I spoke to the FT's Patrick McGee, who you heard at the top of the show and who recently published a book about Apple in China. Michael Acton, who covers Apple at the FT. And finally, Doug Guthrie, a business professor at Arizona State University who used to work for Apple in China. I started by asking Doug how Apple got so dependent on China in the first place.

5:00China entered the WTO in 2001, which many of us fought very hard for. And it just so happens that 2001 was the year that Tim Cook took Apple into China. So we saw during the period of 2001 to 2013, really pretty open markets. I mean, it became clear for very, very smart business people like Tim Cook that you could really manage a diverse set of players in the manufacturing supply chain and really have a significant influence, but also have tremendous profit margins. Labor in China is not just cheaper than the United States, but in China, you benefit from this tremendous migrant labor force of 350 million people who are just seasonal employees.

5:40And so when there are spikes in production, like the launch of an iPhone, you can suddenly move a factory like Foxconn, Zhengzhou from 200 ,000 employees to 1.2 million employees.

5:50Murad Ahmed: So this is where we see Tim Cook and Apple shift to start investing in China, piling loads of money into the country for access to this great manufacturing supply chain. Why does that matter? It's really important to remember that when we think about moving iPhone production to the United States, Foxconn is not the production of iPhones. Foxconn is just final assembly. Apple relies on relationships with about 1 ,600 suppliers in China. And these suppliers, there are hundreds of components that go into an iPhone that all compete with each other for Apple's attention. And so the idea that you could just suddenly build a factory or a supply line in the United States, it just would devastate Apple's profitability.

6:37Not only would labor be more expensive, but you wouldn't have the competitive industrial clusters competing with each other for the business and therefore driving their own margins down. It doesn't work to just build a factory or build a single supply line in the United States. So it's a complicated time.

6:52Murad Ahmed: It is a very complicated time. And someone who's managed to unravel all that, Patrick, you've literally written the book on this. It's called Apple in China, the capture of the world's greatest company. How did Apple's relationship with China grow over the period of time that Doug is talking about to today? Well, the first iPhone is 2007. They built about 5 million of them. By 2015, they're doing nearly a quarter billion. 2015 is significant because that's actually the year, even today, of the highest iPhone production. They've never really gotten back to that level. And so what that means is that you're no longer growing volumes and therefore margins are more important.

7:31And so the real story, I think, between 2015 to today is that the suppliers that built Apple supply chain that are largely Taiwanese, largely American, to some extent Korean, they're being squeezed out in favor of what the Taiwanese call the red supply chain. So homegrown rivals to the likes of Foxconn. And within China, the supply chain is getting more and more Chinese. So companies like Luxshare, Gore-Tec, BYD, and Wingtech are largely taking over Apple assembly operations. So this is winning Apple all sorts of political points in Beijing because their big directive from 2015 called Made in China 2025 is all about indigenous innovation.

8:14Apple makes these moves to use more Chinese suppliers because it's in a political quandary. It's really helped Apple to work with the red supply chain because they can orchestrate the labor, they can get the buildings, they can get the machinery, and as a result, they can operate at lower margins. So if you want to sell more expensive iPhones, you want to make fatter margins on those iPhones, and by working with more Chinese firms, you're able to do it.

8:36Murad Ahmed: Michael, you're the FT's Apple correspondent right now in San Francisco. Apple's really reliant on China, and that's partly because they're really reliant on the iPhone as a product. Has Tim Cook made any headway in changing the reliance on the iPhone revenue streams? Well, over time, Apple's services revenue has certainly taken a larger chunk of its overall revenue share. Things like the App Store, like Apple Pay, iCloud, all the sort of intangible products, subscription-based, a lot of them, that Apple offers. But fundamentally, the iPhone remains around half of Apple's revenue and has been like that for some time.

9:14The idea that we'll pivot away from the smartphone as the sort of main device that we all interact with day-to-day has sort of bubbled up again recently, particularly around the headway we're seeing in terms of the AI. Apple's kind of legendary design guru, Johnny Ive, has partnered with OpenAI's Sam Altman to produce some sort of device. So it's interesting that this tariff issue for Apple is happening at the same time as a bunch of other sort of, I wouldn't say existential, but really maybe troubling questions about the future of the company are bubbling up around the impact of AI on its traditional business model.

9:48At the end of the day, this is a hardware company that relies on a flagship product, which is made with the support of an absolutely crucial relationship with the Chinese state. And that's not changing anytime soon.

10:02Murad Ahmed: What about Apple's push to move its supply chain and manufacturing to India? How possible is this? It is happening and has been happening, albeit at a fairly small scale since the COVID pandemic really sort of laid bare how reliant Apple was on the China's supply chain. The sort of real question is when Trump started on the kind of warpath on moving Apple's operations out of China, which by the way, he was doing during his first term as well. It seemed like Apple's approach was, well, fine, he wants us to sort of de-risk in the sense that we pull out of China, but we can just, we can start really boosting production in India.

10:37First in an earnings call when Apple chief Tim Cook was asked about plans for making in India, he responded by saying that we do expect the majority of iPhones sold in the US will have India as their country of origin. And we have seen some sort of flagpiece investments. So the Foxconn$1.5 billion investment in a sort of display module plant in India, there are signs that ecosystem is growing. But it seems that what Trump really wanted was what he was saying he wanted, which is he wants iPhones produced in the USA. today and what this sort of means for Apple, as Doug was saying, in terms of their profit margins.

11:11You know, the profit margin on an iPhone is what, sort of 30, 40 percent. It's pretty extraordinary. That just wouldn't happen if they were built in the U.S. I had a little problem with Tim Cook yesterday. I said to him, Tim, you're my friend. I treated you very good. Now I hear you're building all over India. I don't want you building in India. You can build in India if you want. So there was this sort of initial attempt to placate Trump, again, replicating what happened during Trump One with Cook, where he announced this$500 billion spending plan in the US, which included this commitment to quite a large AI server building facility in Texas.

11:45There was a doubling of Apple's manufacturing fund to$10 billion. But none of that really went to the core question of, will Apple build iPhones in the US? There was nothing in there about that. And it's fair to question the sort of number that Apple attached to it. So there really hadn't been a major shift of Apple's policy or strategy around its supply chains. And why would there be, really? This is an administration that has proven that it will sort of reverse course on quite major policies within days. The target is moving so constantly that the idea that Apple would completely reassess its supply chain strategy in light of a president who is bound by term limits threatening tariffs, which has been done before and which the administration has climbed down on before, which goes to this latest threat about putting a 25 % tariff on iPhones coming into the US.

12:36If you just run the basic numbers on that, it's a no-brainer for Apple that it would be far less costly for Apple to just eat the costs of those tariffs just on US iPhones than it would be to spend tens of billions of dollars on rebuilding a supply chain in the US, which makes very little sense for it in the long term.

12:53Murad Ahmed: Patrick, the thesis of your book is very much that Apple created a technological juggernaut in China. The kind of made-in-China 2025 project has been spectacularly successful. How intertwined are Apple and China still to this day? Oh, more so than they ever have been. The line coming from Apple, right, is that things are no longer made in China. They'll say they're made everywhere. And they'll cite that 50 countries have multinationals that do something for the iPhone or for Apple products. But there's really a sleight of hand here, as there is with a lot of Apple press releases. So it's true that you have American, Korean, Taiwanese, etc.

13:31companies that are contributing to, let's say, the iPhone. TSMC being a major exception because they do build their chips in Taiwan, but they're largely contributing from within the country. So the size of factories in China can absolutely dwarf those of anyone else. And so the idea that these things are being made everywhere is really nonsense. You have these multinationals that are operating in China. And so the labor demand in China is able to go from 900 ,000 people in March to 1.8 million for an iPhone launch in September. And that's all being orchestrated by the state, right? I mean, state-sponsored buses literally go into the hinterlands and get people onto the buses that can go get jobs at Foxconn or at Luxshare, etc.

14:11You just don't really have that anywhere else. You don't have that sort of system in a democracy like India. And even if you have it in Vietnam, it's just one-fifteenth the size of the population. So it really can't happen. The real estate within the iPhone is increasingly Chinese. And more and more of the multinationals are being squeezed out in favor of Chinese companies. And that just embeds Apple evermore to China.

14:31Murad Ahmed: So clearly it seems like Tim Cook has been really good at working with the Chinese government, really managing those relationships to get the best for Apple. So I guess the question now is, can he do the same with Trump and Washington? The difference between Tim Cook negotiating with the Chinese versus with Washington is with China. They're already doing so much. I mean, insofar as people had already reported on Tim Cook signing a$275 billion investments pledge to China, my take is that it was really just a marketing drive of what they were already doing. They're just explaining it is in our interest not to be a secretive company.

15:09And instead, we will market to Beijing what we're already doing. The problem with the US is it has to be very different. It's not a marketing thing because they're not doing anything in the US in terms of production, right? No products that you buy right now are being built in the US. And insofar as Trump wants the iPhone to be built here, that's like the most high volume complicated product in the portfolio. So you should be starting with something that's higher margin, that is lower volume, and can be built by smaller teams that don't have the complicated depth and breadth of the supply chain.

15:41The problem is that's what Apple did in 2013 with something called the Mac Pro. Listers might know it as the trash can Mac. And it was basically an unmitigated fiasco to quote one person on the project. Tim hated it to quote another person on the project. And that was building 500 or 600 computers a day. So if in Texas you can't build 500 computers a day, you're not about to take on iPhone orders where volumes are 1 million per day.

16:05Murad Ahmed: So we've got a sense of how dependent Apple is on China. We're going to take a short break, and we'll be back with more on what Tim Cook can do given the pressures he's facing from Trump.

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17:19There is a lot of news coming out of the White House right now. The tariff maneuvers are really Donald Trump's. You broke it, you bought it. On Swamp Notes, the weekly U.S. political chat show from the Financial Times, we break down what the latest moves from Washington mean for the global economy. The post-Cold War order of a unipolar U.S. hegemony is over. Listen to Swamp Notes wherever you get your podcasts.

17:49Murad Ahmed: Patrick, the thesis of your book is that the Apple supply chain in China helped Apple become the big tech company it is today, but it also helped China grow into a tech superpower in and of itself. And in that way, he's created a problem with Trump. Is there any way you can think that he can fix it? So it's a question I keep getting asked, and my answer is no. So when Trump went after Huawei, he's playing chess, right? He goes after the king, the most important company in China, and tries to knock them over. He doesn't succeed. And so Huawei is now back with a vengeance. But think in contrast of how China deals with Apple.

18:24They don't play chess. They play Go. And in Go, you encircle your enemy until they basically have to give up, that there's no logical move that they can take, and they just call the game. There's no equivalent of checkmate. And that's how Tim Cook must be feeling right now, that he can't move to India. He can't diversify outside of China. He's totally stuck there. There's nothing they can really do. That's Chinese strategy at its finest. And I think they've really been outplayed by a long-term thinker. So I want to be able to be more optimistic. I want to believe in American manufacturing. But supply chains take decades, and this is the culmination of four decades of Chinese investment.

18:59Murad Ahmed: Doug, I wonder what you think about how bad this current situation is for Apple's position in China itself, having to find some ways of making peace with the Trump administration, but also showing that it can try and move some of its supply chain out of China. How bad could things get within China too? It's a great question. And my view is that they're probably pretty safe in China. I mean, when I left the company, there was sort of such a shift in culture of how do you work together with the Chinese government? And how do you think very carefully about this notion of partnership? Now, one of the things that's also really important here is that when we think about China, I think it's often a mistake to think about Beijing and Xi Jinping only, because China is a system of local governments as industrial firms.

19:52These local governments are very focused on how to build their own industrial clusters and how to build their own systems of development. And their political careers depend on what they're contributing to the GDP. And I think Apple did, as I was watching when I was there, they were doing a very good job of really digesting this idea that it's not just about your lobbying with Beijing and what you're telling Xi Jinping that you're doing. It's what you're telling each local government that you're doing and how do you work in partnership with each of them. And when I saw it, I thought Apple was doing it brilliantly.

20:25And so my guess is that the risk for them in China is not that bad. I think the risk in the United States is much worse just because we do have a leader who really wants to call the shots and really wants people to come cap and ham and do what he wants them to do. But it's also really important to remember that Apple didn't do this alone. Like we opened the door for this under Milton Friedman and Ronald Reagan in neoclassical economic theory. Like we are the ones who invited firms to go abroad because cheaper labor and eventually more sophisticated manufacturing supply chains would be there. And so Apple's just a part of that story.

20:59So I think as long as Apple continues to work in partnership with Beijing, but also with the local governments, they're going to be fine in China. I don't know what it means for the United States.

21:09Murad Ahmed: Patrick, I have to bring you in briefly on this. You have a slightly different take. This could be quite a big problem if China took a turn against Apple. I actually agree with Doug that Apple is the great teacher of China. I mean, Huawei has called Apple a teacher in China. And the reason why suppliers work for so little margin is that they understand they're getting tuition-free training at the Ivy League equivalent of hardware engineering. So China has very few reasons to go after Apple and many reasons not to go after Apple. But my take is one of negative externalities, to use the economic jargon.

21:43This is working great for Apple. This is working great for China. It's not working great for a lot of other people. It is great for iPhone prices, I'll give you that. But I think the business ties between Apple and China are, in a business sense, totally unbreakable, but in a political sense, totally untenable. How much sense does it make that we're sending America's best engineers to up arm the biggest adversary America has seen since the country's founding? That sounds so hyperbolic, but which part of that statement is wrong? However, one thinks of China, they are a great rival, and it doesn't make a whole lot of sense to be helping them with the most advanced electronics in the world.

22:20And there's think tanks like ITIF that Apple is actually a member of that have said Made in China 2025 is a hook or buy strategy of being anti-Western, severing China from the global supply chain, and building self-sufficiency in all the important areas necessary for 21st century hegemony. Well, Apple, one of their members, is the biggest supporter of Made in China 2025. Perhaps it was unwitting in the earliest stages, but they made a strategic decision to continue supporting and quadrupling down in the past 13 years. That's where we have a real struggle. It's not that China is going to wake up one day and go after Tim Cook or go after Apple.

22:57I don't think that's likely at all. The trouble is what happens if we let things continue.

23:02Murad Ahmed: Michael, we've set out how we got here and we've set out the stakes. What can Tim Cook do now in the US that can get him out of this bind? Well, we know that Trump is receptive to flattery. We know that he likes standing on a stage with Tim Cook. as he did during his first term and announcing a major manufacturing plant somewhere, no matter what it's doing. It's the optics of it that seem to matter to him. And I'd maybe like to start with Tim Cook, who's done such an incredible job at Apple, become a friend of mine. And he's a friend because he does a great job. I mean, we want to get things done.

23:42But if you go back and replay how that played out during the first Trump term, there were some pretty dicey moments then as well with Trump calling out Apple for the exact same thing. various ups and downs and threats of 25 % tariffs again, which did not emerge. This is a company that in 2024, its profits were around$100 billion. So when you look at that$900 million that Apple's immediately been hit by in the current quarter, it's a lot of money, but it's peanuts. If you think about the company that has$400 billion in revenue a year, there are ways that it can eat that cost from a US-specific tariff.

24:20And then further down the line, it can also raise prices. There's a lot of numbers that get floated around about how much the iPhone is going to cost if these tariffs come in or if there was an attempt to shift it to the US. They're not particularly helpful because people are just plucking these numbers out of thin air. And it's important to remember, you know, the US iPhone business for Apple is a substantial part of its business. But it's also a company that sells all around the world and has a vast and loyal customer ecosystem who are kind of locked into its products in many respects. They can hike services prices, for example.

24:54They can hike prices globally for the hardware. It doesn't have to just be in the US. So there are various tweaks that they can do. This isn't sort of an existential problem for Apple. The existential issue is the one that Patrick and Doug were just speaking to, which is this profound question about, is the US comfortable with that relationship? And I would say, you know, Cook has had fairly good success in the past communicating with Trump. And there were a lot of apocalyptic predictions when the reciprocal tariffs were announced earlier this year, which immediately lost their edge when we saw the US row back on these threats.

25:28It's important to remember that seems to be how this administration operates. And Cook speaks to Trump very regularly. He was in the White House in February. Just a few days later, he announced that$500 billion investment package, which make of that what you will. We know that he can call Trump directly on the phone. He's there in the room. And it goes back to what he said way back in 2016, when Trump won the election and Cook had actually backed Hillary Clinton and donated to her campaign. Cook said, he actually wrote to staff and said, the way you influence these issues is to be in the arena.

25:59He was saying, I need to be there in the room talking to him. It doesn't seem that that relationship has gone away just because Trump has taken the opportunity over recent weeks to, I guess, give Apple a kicking, but it's, It's, I think, a familiar situation to him in some respects.

26:13Murad Ahmed: Thank you so much to Doug, Patrick and Michael for coming on the podcast today. Thank you. Thanks. Thank you so much for the conversation. It was great to be here.

26:26Murad Ahmed: That was Doug Guthrie, formerly of Apple, Patrick McGee, who wrote the book on Apple in China, and the FT's Michael Acton, speaking to me about the challenges for Tim Cook running a tech giant that makes most of its products in China under a president that wants them made in America. Right from the beginning, Tim Cook's approach to handling Trump has always been, get in the room with the president. Make sure Trump feels you're on his side. No one did that more than Elon Musk. Oh, let me tell you, we have a new star. A star is born, Elon. Under Trump, Musk sought to hack the government machine.

27:03Murad Ahmed: but now he and Trump are in the midst of a bitter breakup. Look, Elon and I had a great relationship. I don't know if we're well anymore but I'm very disappointed in Elon. I've helped Elon a lot. People leave and some of them actually become hostile. Sort of Trump derangement syndrome, I guess they call it but I don't know what it is. What happened? What next for Musk? And what does it all mean for the future of his business empire and his grand plans for government? There's more of that in the next episode of Tectonic You've been listening to Tectonic with me, Murad Ahmed This episode was produced by Josh Gabbard-Doyon The senior producer is Edwin Lane And the executive producer is Flo Phillips Sound design by Breen Turner and Samantha Giavinka Original music by Metaphor Music Manuela Zaragoza and Topher Forges Are the FT's acting heads of audio

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