Apple pours $600b into Trump’s American manufacturing dream

Leverage is everything in today’s White House, with the administration using tariffs to force business leaders and nations to toe the line.

But leverage doesn’t just run in one direction. While you can achieve a certain amount through strong-arm tactics, there does come a point at which limited concessions must be made or those golden goose eggs will stop appearing with the dawn. It’s all in Art of the Deal.

Apple promises billions in US investment

As expected, Apple CEO Tim Cook appeared at the White House to promise an astonishing $100 billion in investment in the US, including pouring cash into the development of next-generation technologies. That investment means Apple will now invest $600b in the US across the next four years, he said.

Cook stopped short of bringing iPhone assembly to the US but seems to have made sufficient serious commitments to satisfy the current administration, which has excused Apple from some of the steep tariffs it had threatened to hammer the business with.

Behind the smoke, mirrors, presentation glass, and pure gold of the announcement, a couple of significant strategies have emerged:

Apple will contribute to the future development of US industry through its new Apple Manufacturing Academy.

Apple is also investing in the development of new technologies, which will be made in America.

Agreement has also been reached to make billions of chips used inside Apple’s devices in the USA. 

Apple is also investing in the one big vulnerability the US has when it comes to silicon manufacturing: its lack of rare earth supply. Apple’s recently disclosed $500 million investment in MP Materials represents a big investment in creating an end-to-end silicon supply chain in America.

These commitments to a more US-centric future supply line are being supplemented by big investments in the existing US manufacturing supply chain, including in the Apple American Manufacturing Program.

The iPhone won’t be made in America for a while (though we were told “Tim Cook is working on it”), but put together, these announcements mean that Apple is making significant and highly strategic investments to help build the future for US industry. It also means all the glass made in iPhones and Apple Watch will “soon” be made in the US.

Solving big problems, one challenge at a time

Through these targeted investments, Apple is grappling with the big problems that hold back the expansion of the US tech manufacturing industry: Training, facilities investment, technological optimization of manufacturing processes, raw materials supply, and investment in new tech the US can hope to become a unique supplier for.

All of these challenges have to be solved if the current US government’s vision of a larger manufacturing industry that creates millions of jobs is to be realized.

These are existential challenges that need to be solved before manufacturing jobs have any chance of returning to the US in larger quantities. Take staff, for example: the reality is that if you can’t find trained staff, there’s no point building a factory, which means you need to train the staff first.

Equally, if you can’t get the raw materials locally, then it makes more sense to work with them at factories close to their source. Finally, the best industries are unique industries — unless the US sees wages collapse, then it can’t realistically compete in labor costs against lower-wage nations. 

What I’m saying is that Apple’s now $600 billion investment in US manufacturing appears to reflect a realistic attempt to ease some of the pain points that need to be solved if a tech industry manufacturing renaissance is to be unleashed in the US.

Unless these problems are solved, then that kind of enlightenment just can’t take place.

We have a long way to reach the mountain top

But, as with any journey to any so-called “Promised Land,” it’s going to take time to get there, and no one presently at the top of the pile appears to have the capacity to travel in time or part the seas. 

The big challenges Apple has put its money into solving are real barriers to the overall US manufacturing investment plan. That, presumably, is why the current administration appears to have accepted Apple’s point and given the company more time before imposing those huge but fluctuating tariffs that so threaten its business.

You can argue whether these moves represent compromise or capitulation, but those questions at present don’t seem to figure anywhere in US media, despite which the “athletic” form of Tim Cook, who rises at 5am most days to go to the gym, seems to have identified an arrangement that can easily be seen as victory.

$600 billion to save Apple’s US business while also enabling it to invest in more jobs on its home turf may seem a small price to pay eventually, particularly if you are among the tens of thousands of Americans likely to find employment as a result. Though the always present danger when dealing with any authoritarian is that the more you give, the more they demand to take.

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