Donald Trump’s grand plan to Make America Great Again apparently starts with nudging Apple CEO Tim Cook to start manufacturing iPhones in America, mostly by offering one of Silicon Valley’s most powerful men “incentives” to bring production back into the states and promising “large tax cuts” for corporations.
During Trump’s canceled, complained-about, and eventually rescheduled interview with the New York Times, the president-elect mentioned that he’d received a phone call from Cook after his election to talk business.
Trump’s selling point was the vague promise of “incentives” to companies like Apple that would shift production back to plants in the United States, and some “very large tax cuts” for corporations. Trump said that it would be a “real achievement” if he could get Apple to build a new plant in the U.S.
Here’s the portion of the interview in full:
“I got a call from Tim Cook at Apple, and I said, ‘Tim, you know one of the things that will be a real achievement for me is when I get Apple to build a big plant in the United States, or many big plants in the United States, where instead of going to China, and going to Vietnam, and going to the places that you go to, you’re making your product right here. He said, ‘I understand that.’ I said: ‘I think we’ll create the incentives for you, and I think you’re going to do it. We’re going for a very large tax cut for corporations, which you’ll be happy about.’ But we’re going for big tax cuts, we have to get rid of regulations, regulations are making it impossible. Whether you’re liberal or conservative, I mean I could sit down and show you regulations that anybody would agree are ridiculous. It’s gotten to be a free-for-all. And companies can’t, they can’t even start up, they can’t expand, they’re choking.”
Let’s break this down a little: Apple has no problem with tax breaks, and government subsidies and incentives often play a large role in where businesses decide to put down roots. Trump promised on the campaign trail to slap Chinese imports with a 45 percent tariff, which would seriously put a damper on Apple’s operations in that country. The other problem is the U.S. isn’t really a practical place to assemble or produce iPhones anymore. The Wall Street Journal notes that the iPhone sources parts from all over East Asia, not just China, and shifting assembly to the United States would make shipping costs go way up. The common estimate is that a U.S.-assembled iPhone would cost $30-$40 more per unit, which isn’t insurmountable, but making all of the parts in the U.S. would add up to $90 onto the price for each device.
Cook himself told CBS’s 60 Minutes in December of 2015 that such a move wouldn’t really be productive toward job creation either, because U.S. workers don’t have the “vocational kind of skills” that their Chinese counterparts do. “That is the reality,” Cook said.
Automation has also taken its toll on the American manufacturing industry — U.S.-made iPhones might as well be “robot-made iPhones.”
Cook’s response to Trump was far more blank. “I understand that [it would be an accomplishment for you],” he said. In other words: “Sure, kid, we’ll see how that goes for you.