Trump Says ‘There’ll Be a Little Disturbance’ As Apple Faces New $20 Billion Tariff Bill — But Tim Cook’s Old Warning Means It’s Not That Simple

President Donald Trump’s aggressive return to tariff-driven trade policy is shaking up markets — and threatening to push up the price of some of the world’s most popular consumer electronics. At the center of the storm sits Apple (AAPL), the world’s most valuable tech company and one of the U.S. firms most exposed to China.

Tariffs Bite Deep Into Apple’s U.S. Sales

Apple reportedly manufactures about 95% of all Apple products in China. With new tariffs reaching as high as 20%, Apple could be looking at a hefty bill in the not-so-distant future. The U.S. accounts for roughly 35% of all of Apple’s revenue, meaning the U.S. accounted for roughly $103 billion of Apple’s $294 billion in hardware sales last year. A 20% tax on that means Apple will need to cough up $20 billion per year in additional costs.  

While this might seem like a drop in the bucket for the $3.3 trillion giant, Apple had $93 billion in net income for fiscal year 2024. Assuming all else equal, that’s a 20% decline in yearly net income from just U.S. tariffs alone. 

While Apple has previously absorbed some tariff costs to avoid alienating customers, its current strategy isn’t clear. Although it’s unlikely a complete 20% increase in costs will be needed to offset the tariffs. One Bank of America expert told CNBC, only a 9% price hike would be needed to completely offset the tariffs.  

Consumers Already Feeling the Pressure

Retailers like Target (TGT) and Best Buy (BBY) have warned customers to expect higher electronics prices. Acer has already raised prices on laptops in response to February’s additional 10% tariff levied on Chinese imports, and industry experts say Apple may not be far behind.

Still, Apple is trying to soften the blow. Just one day after the latest tariff took effect, the company announced a $100 price cut on the new MacBook Air — a signal that it may try to offset price increases on flagship products by adjusting prices elsewhere or introducing more aggressive trade-in offers.

Apple’s $500 Billion Bet on U.S. Manufacturing

To mitigate tariff exposure and curry favor with the Trump administration, Apple has unveiled a sweeping $500 billion U.S. investment plan over the next four years. The initiative includes:

• A new server factory in Houston to power Apple Intelligence (its AI platform), expected to create thousands of jobs.
• Doubling its Advanced Manufacturing Fund to $10 billion.
• A multibillion-dollar chip order from Taiwan Semi’s (TSM) Arizona plant.
• 20,000 new hires focused on AI, silicon engineering, and software development.
• A new Apple Manufacturing Academy in Detroit offering training to local businesses and workers on AI and smart manufacturing.

“We’re bullish on the future of American innovation,” said CEO Tim Cook in a recent statement. “From building advanced technology in Texas to doubling our investment in U.S. manufacturing, we’re proud to support American jobs and ingenuity.” 

A Battle of Logic and Policy

Cook has defended Apple’s reliance on China for several years now. A 2018 video that has recently gone viral shows the Apple chief explaining why Apple relies on China — not for cheap labor, but for its unmatched concentration of skilled manufacturing talent.

“In the U.S., you could have a meeting of tooling engineers, and I’m not sure we could fill the room,” Cook said. “In China, you could fill multiple football fields,” Cook continued. Apple’s CEO says it’s not about the cost of labor but the “quantity of skill.” 

Apple’s precision manufacturing — which demands advanced tooling and highly specialized skill sets — cannot be relocated overnight. There are current shifts, with roughly 15% of iPhones now manufactured in India. But Apple has made no indication it plans to abandon the world’s leading manufacturing hub completely. This means Cook doesn’t think the U.S., as it currently stands, has enough talent to manufacture at the speed, precision, and quantity required to maintain Apple’s current level of output. 

Tariff Economics: Theory vs. Reality

Trump continues to frame tariffs as a tool to balance the trade deficit and revitalize domestic manufacturing. “There’ll be a little disturbance,” he told Congress recently. “But we’re OK with that.”

But economists — and corporate leaders like Cook — argue that U.S. companies and consumers are the ones footing the bill, not foreign governments. Tariffs function as a tax on imports, paid by American firms like Apple, which must then decide whether to eat the cost or pass it on. 

But retaliation from other countries, like China, has already begun. China has already introduced new tariffs on U.S. commodities like soybeans and crude oil. Meanwhile, 25% tariffs on goods from Mexico and Canada remain on the table as trade talks continue. Companies might be less inclined to continue fronting that bill if this trend continues. Similarly, smaller companies without Apple’s war chest will be impacted more, certainly leading to higher costs.