The trade war between the United States and China has most big tech
companies really worried about whether tariffs could cut into their
bottom lines. But one company was able to thread the needle between a
volatile American president and the world's biggest consumer market.
More than any other tech leader, Apple CEO Tim Cook has spent a lot
of time charming the Trump administration, and it seems to be paying
off.
President Donald Trump and Cook's relationship really started after
Trump's election win in 2016.
Donald Trump took a few shots at Apple during the campaign, but as
soon as he was elected, he told The New York Times in an interview,
one of the people who called to congratulate him was with Tim Cook.
This is Kif Leswing, Tim Cook's office reaching out to Donald Trump,
you know, saying congrats on being the president.
I hope we can work together, kind of stuff.
That's how the relationship started.
So after Trump's win, he called the CEOs of several tech companies to
meet at Trump Tower.
Apple CEO Tim Cook was one of them.
President Trump pulled together a lot of business leaders w ith a
surprising number of high tech leaders there
This is Jeff Sonnenfeld.
He's a senior associate dean for leadership studies at Yale
University's School of Management.
They all came. He wasn't yet president.
He is president-elect.
Most didn't know him.
Very few supported him.
And that's true of the U.S.
business community in general, not just Silicon Valley types.
They still came, which was interesting.
Tim Cook used that as an opportunity to start to forge a
relationship. In a message to Apple employees, Cook explained why he
showed up to talk to Trump despite supporting Hillary Clinton.
According to TechCrunch, Cook wrote, 'he never found being on the
sideline a successful place to be.'
And, 'the way that you influence these issues is to be in the arena.'
Since the meeting, Cook continued to cultivate close ties with Trump
and his family. The Apple CEO met with Trump over dinner at his New
Jersey golf course twice since 2017.
He's attended state dinners hosted by the president and he has a good
relationship with the Ivanka and Melania, according to White House
officials. President Trump likes to break bread with people and he
relaxes over food and other people relax over food.
So it's food and the golf course and those kind of scenes that are
ways that you get away from wearing the formal uniforms and get off
the pillars of office.
In February 2019, Cook joined the American Workforce Policy Advisory
Board, a group dedicated to getting the unemployed into the
workforce. And since 2017, Cook has been a part of the White House
Office of American Innovation, a group focused on improving quality
of life and spurring job creation.
The boards are led by Ivanka Trump and Jared Kushner.
Cook and Ivanka Trump even traveled to an Idaho elementary school
last November for a photo-op.
Apple had donated iPads to all the teachers and students in the
district. This is really Tim Cook working a personal relationship
with Trump. And as different issues unfolded, when Tim Cook wants to
take a different position, say, on climate change or on immigration
policies, he'll give a heads up alert to the White House.
And he'll often do that through Ivanka Trump or more often through
Jared. But so far as I know, there are no remote financial
arrangements behind this.
Apple claims it doesn't engage in politics and it doesn't have a PAC,
something Cook has said shouldn't exist.
Most companies in Silicon Valley spend quite a bit more in formal
lobbying, whereas Apple spends very little in formal lobbying.
It has more than the personal diplomacy rather than the K-Street
bandit is working over the White House.
Nevertheless, Cook keeps in touch with Trump, making calls and
scheduling meetings when appropriate.
So he has Trump's ear when government policy collides with Apple's
corporate interests.
The president says that Apple CEO Tim Cook is a great executive, at
least in part because Cook calls him on the telephone.
The only one that calls me is Tim Cook.
He calls me whenever there's a problem.
He'll call. That influence is about to be put to the test as Apple
applies for exclusions from a new round of tariffs.
Big American companies are caught in a catch 22 when it comes to
China. First, the United States has about three hundred twenty nine
million people.
That makes it the third most populous country on earth.
China has about 1.3
billion people.
That means in order to keep growing, most American companies need
access to Chinese consumers, and for companies that rely on
manufacturing, the situation is even more thorny.
It's often cheaper to make or assemble products in China and then
ship them to a state like Ohio than it is to make those products in
Ohio in the first place.
President Donald Trump's trade war puts those companies in a tight
spot. In summer 2017, Trump unleashed tariffs on billions of Chinese
imports. Now, after more than a year of back and forth tariffs
between the U.S. and China, companies making consumer tech hardware,
like Apple, are going to get hit with tariffs if the U.S.
and China can't close on a new trade deal.
So Apple has become the poster child for the trade war for two main
reasons. One, they get a substantial amount of their sales from
mainland China. So as a market and having access to the market, that
is critical for Apple.
But there's a double whammy here, because Apple also does the
majority of its production in China as well.
And through its production partners, including Foxconn, you know,
they employ millions of people in China.
New tariffs went into effect on September 1st, 2019 in those hit some
Apple products. And now Apple is asking the administration for
exclusions from that round of tariffs.
But in the meantime, the United States Trade Representative Office
has also already delayed some of the tariffs on certain consumer
items until December 15th.
2019. The delay included cell phones, computers, video game consoles,
some clothing products and certain toys, which Trump said was decided
to help consumer spending during the holiday season.
For Apple, the December 15th tariffs means a 15 % tax on Chinese
imports, which would force Apple to either raise prices or accept
lower margins on core products sold in the U.S.-
Think iPhones and MacBooks.
They're very anxious that they get a carve out if there are tariffs
against products produced in China, because that's where most of the
Apple phone production is still.
They have very effectively explained to President Trump that he would
be helping Samsung.
The federal government now has to decide whether Apple gets another
tariff exemption on core products.
Cook has already appealed to Trump, even though the decision will be
made by a trade representative.
Tim was talking to me about tariffs.
And, you know, one of the things that he made a good case is that
Samsung is the number one competitor and Samsung is not paying
tariffs because they're based in South Korea.
And it's tough for Apple to pay tariffs if they're competing.
Now, the problem was that Samsung, a competitor, good competitor,
wouldn't be paying tariffs and Tim Cook would have got to help him
out short -term with that problem, because it's a great American
company. Samsung is in South Korea.
Not fair. At the beginning of the trade war, Apple seemed confident
it could avoid tariffs.
In a June 2018 interview, Cook said he didn't believe the iPhone
would get hit. The New York Times reported his confidence came from
the assurances within the Trump administration.
If you listen to what Tim Cook has to say about the whole U.S.-China
trade relations, he is very carefully dancing around that core topic
of saying, look, these two economies are intricately linked together.
We have to come to a resolution.
This is not good for China or the U.S.,
that is good for Samsung, which has its production elsewhere in Asia.
But the December 15th tariffs could be worse for Apple.
It's really important for Apple to protect that supply chain in China
in addition to just selling iPhones there.
When Trump signed his tax reform bill in December 2017, Apple
repatriated hundreds of billions in overseas cash and a lower tax
rate, saving the company an estimated 27 billion dollars in taxes.
A month later, Apple announced its plans to pay thirty eight billion
dollars in taxes.
Apple detailing how to accelerate its pace of U.S.
investments and job creation, saying it's going to make a 350 billion
dollar contribution to the U.S.
economy over the next five years.
Trump got wind of Apple's plans and tweeted on January 17th 2018.
I promised that my policies would allow companies like Apple to bring
massive amounts of money back to the United States.
Two weeks later, Trump cited Apple in his first State of the Union
speech. Apple has just announced it plans to invest a total of three
hundred and fifty billion dollars in America and hire another twenty
thousand workers.
Besides one small factory in Ireland, Apple doesn't own and operate
any of its manufacturing.
Instead, it contracts with manufacturers who assemble the company's
products and most of them are in China.
Tim Cook has been the architect of, under Steve Jobs his era, of
taking manufacturing out of the U.S.
and and outsourcing it to China, to Foxconn and others in China.
Foxconn, of course, which is a Taiwanese company, but it's located so
much of the manufacturing in the mainland.
Meanwhile, Trump has focused on getting Apple to make its products in
the U.S. He's always been about American manufacturing, so he's
criticized Apple a few times over its practice of doing the vast
majority of its manufacturing in China.
You got to start doing it over here.
And you really have . I mean, you've really put a big investment in
our country. We appreciate it very much.
Trump telling The Wall Street Journal that Apple CEO Tim Cook has
committed to building three big manufacturing plants here in the U.S.
Earlier this year, Apple announced a new version of the Mac Pro.
In September, the company announced it would assemble them in Austin,
Texas, after it received tariff exemptions on 10 of the 15 parts it
needed to assemble the machine.
Cook said in a statement we thank the administration for their
support enabling this opportunity.
Steve Jobs would have been a horrible CEO in this moment because
think about what he would have to deal kowtowed to both Beijing and
Trump. Can you picture in a million years Steve Jobs threading the
needle in the way that Tim Cook has.
He literally is in a position where Chinese carriers are the lifeline
for his business in the second biggest economy in the world.
And they manufacturer a lot of the phones there.
He has to live with that reality while simultaneously convincing Mad
Dog Trump that he's going to hire more people and build more things
here. And he's done it incredibly well.
Like, could you imagine Steve Jobs pulling that off?
I really can't. So maybe what was needed right now is not this beacon
of innovation. Maybe it's competence and logistical savvy and
calmness. And that is what Tim Cook has brought to the table.
That's why he's added about six hundred billion dollars in market cap
to this company.
Cook, for the most part, has been able to steer away from Trump's
public attacks. President tweeted about his new iPhone quote to Tim,
The button on the iPhone was far better than the swipe.
Despite Trump's iPhone critique, Sonnenfeld says Cook has found the
perfect combination when it comes to his relationship with President
Trump. Well, it's a perfect recipe for Apple.
I don't know that it's a perfect recipe for the nation, but it works
for him. What Cook does is he retains a seat at the table.
He presses, you know, what he thinks he is or what Apple's point of
view on the policy is.
And, you know, on those on the stuff that he disagrees with Trump, he
makes his point known on that.
He's issued companywide memos on the Paris Accords and various
immigration related policy moves from the Trump administration.
But he never he never makes it personal.
There was an opportunity to humiliate the president in one of these
advisory council meetings.
You may remember he turned to Tim Cook and referred to him as Tim
Apple. We appreciate it very much, Tim Apple.
And then on his Twitter icon is Tim Cook replaced his
name with an apple.
Now that was ambiguous.
There are ways where you could see that he was maybe having a little
bit of a spoof with the president, but the president and others could
see that he was making fun of himself and somehow it diffused the
situation pretty effectively.
In part because of situations like this, Cook has cultivated what
Sonnenfeld calls personal respect, and that's what has helped him
avoid negative criticism from the president.
Tim Cook was quick to see that he doesn't want to be on the wrong
side of public attacks from President Trump.
And there must be a way you can talk with him privately when you have
issues. And he's found that pipeline both through one-on-one
discussions, not using collective action, not using lobbyists, but
President Trump, the personal respect is very important to him, and
he'll show that respect.
In order to cultivate that personal respect, Cook has met with Trump
face-to-face, which Sonnenfeld says is how Trump prefers to do
business. He likes to meet in person, and he has a, despite the anger
at these rallies and the language that's used and what people will
talk about the divisiveness, on one-on-one sessions.
He can be disarmingly charming and he knows that.
And Tim Cook responds to that.
I don't know how charming Tim Cook is, but I think he's a very good
listener and he doesn't have a personal agenda.
There's no grandiosity or egomania of Tim Cook.