Apple’s winning $100 billion bet to avoid tariffs

On Wednesday, Apple CEO Tim Cook went to the White House, 24-karat gold and glass statue in hand (smart, because as we’ve highlighted, Trump loves gold things), to announce the company’s $100 billion American manufacturing program. The plan boosts US production of more iPhone parts and also includes agreements with a number of American companies like Texas Instruments, Applied Materials, and Corning.

“For the first time ever, every single new iPhone and every single new Apple Watch sold anywhere in the world will contain cover glass made in Kentucky,” Cook said.

When asked about making the whole iPhone in the US — something analysts have said is impossible without raising the price substantially — Cook punted, saying, “There’s a lot of content in there from the United States.”

But even if Apple products are not 100% made in the USA, Cook’s effort was enough for Trump to give Apple an exemption from the 100% chip tariff others may face if they don’t shift production to the US.

Wedbush Securities’ Dan Ives lauded Cook’s play, calling it a “good strategic poker move” by the CEO, though he also noted Apple’s remaining challenges.

Cook’s maneuver was also cheered by Bank of America, which raised its price target for Apple on the news.

The Takeaway

It’s not just Apple benefiting from Trump’s exemption: TSMC, Nvidia, Micron, and other companies that have made similar pledges to invest in US manufacturing also rose yesterday. On the other hand, Trump’s attention can sink chip stocks, too: Intel got shellacked yesterday after a letter from Senator Tom Cotton said Intel’s “CEO’s Ties to China are Concerning,” leading the president to suggest that said CEO should resign.