How Will President Donald Trump’s New Tariffs Affect Apple Products and Prices?

With its heavy reliance on China, Apple remains vulnerable to Donald Trump’s tariffs. But Tim Cook likely has a plan to soften the blow. Also: A detailed look at Apple’s upcoming smart home device, and the company makes headway on the first-ever hardware upgrade for AirTags.

Last week in Power On: Apple’s future hinges on smaller bets, rather than the next big thing.

For all their progressive values, Apple Inc.’s top management was probably relieved when former President Donald Trump won reelection this month.

Trump’s policies and rhetoric may clash with Apple’s public positions (on the importance of reducing emissions, for instance), but the company has had an antagonistic relationship with the Biden administration. Apple was sued by the Justice Department in an antitrust case that might drag on for years, and mounting regulatory scrutiny around the world is threatening its operations.

The current White House also didn’t step in to resolve a patent dispute that forced Apple to stop selling watches with a blood-oxygen feature. Chief Executive Officer Tim Cook may be looking forward to having an administration that’s friendlier to his interests.

And yet, Trump’s trade plans loom large over the company. Apple makes the vast majority of its products in China, the main target of his proposed tariffs. Though the company has shifted some production elsewhere in Asia, including India, it hardly makes anything in the US. With Trump touting a 60% tariff on goods imported from China and a 20% levy on things made elsewhere, Apple is seemingly in trouble.

All that would appear to suggest that Cook is facing one of the biggest potential headaches of his career. The reality, though, may be far different.

The CEO has a good chance of getting tariff relief from Trump, and he could leverage their relationship to address some of Apple’s other challenges. When Trump was in office from 2017 to 2021, Cook was almost a White House fixture, meeting frequently with the president. Over the last four years, in contrast, Cook and the Biden administration have rarely interacted.

The last time around, Apple was mostly able to sidestep the tariff threat. Cook sold Trump on the idea that an iPhone tax would benefit Samsung Electronics Co., a South Korean rival to Apple. He also pitched the administration on the Apple Watch being a life-saving device. That product briefly had a 15% tariff, but it was reduced in 2020.

This time, you can bet Cook will take a similar tack in seeking tariff relief. He has a clear path:

This will be familiar territory for Cook. In 2019, he held a joint press conference with Trump to thank him for making it possible to assemble the Mac Pro in Texas — despite the fact that the computer was built in that same Austin factory since 2013 and almost entirely with components made in China.

Cozying up to Trump may not sit well with many Apple employees (or even some of the company’s senior executives), but Cook will likely do what it takes to protect Apple from tougher trade policies.

The company could benefit in other ways too. With a new administration, the Justice Department might be more likely to drop its lawsuit against the iPhone maker. But Trump’s current nominee for attorney general, Matt Gaetz, has been a critic of Big Tech.

Cook also may seek help dealing with the European Union, which is looking to rein in the App Store. In fact, Trump said that Cook called to vent about the EU weeks before the election. It’s possible that Trump could impose retaliatory policies that might get Europe to ease its attack on US companies.

Now, there are some complications this time around. Elon Musk, a Trump backer and key adviser, has had an adversarial relationship with Cook over the years. He chafed at Apple’s unwillingness to buy Tesla Inc. a decade ago and has complained about App Store commissions. Musk may argue against helping Cook preserve a business model that he has called unfair.

Another wild card is how employees will react. Slack, the now-indispensable messaging tool, wasn’t used by Apple the first time Trump was elected. Today’s workers use it regularly to speak up about Apple policies, and some may not hesitate to blast the companywide Slack channel with complaints about Trump. A backlash could make it more challenging for Cook to play nice with the president.

So far, Cook hasn’t met with Trump publicly since the election. But his words on X said it all: “Congratulations President Trump on your victory! We look forward to engaging with you and your administration to help make sure the United States continues to lead with and be fueled by ingenuity, innovation and creativity.”

Other major tech CEOs posted similar messages, but it marks a shift from Trump’s win in 2016. After that election, Cook privately emailed Apple employees in a soothing tone, talking about the importance of diversity and quoting Martin Luther King Jr. This time, Apple simply posted Cook’s congratulatory X message on an internal blog.

Here’s how Apple’s next major product will work. The company has been developing a smart home command center that will rival products like the Amazon Echo Hub and Google Nest Hub. The idea is to build a beachhead in the home with a device that can take advantage of Apple’s HomeKit ecosystem and a new operating system called homeOS. It also will capitalize on Apple Intelligence and the revamped Siri digital assistant, which will be able to more precisely control software using the new App Intents feature.

This past week, I reported details of the device, including its features, the hardware’s look and feel, and how the operating system will work. The product will run many of Apple’s core apps, like Safari, Notes and Calendar, but the interface will be centered on a customizable home screen with iOS-like widgets and smart home controls. Apple has been dropping hints for years that it was headed toward a new kind of home interface. The iPhone’s StandBy Mode — added in iOS 17 — offered a preview of this experience. And Apple overhauled Control Center with a HomeKit focus in iOS 18, making it easier to use the software to control smart home accessories such as lighting.

Like many other Apple products, the hardware will be available in silver and black. The device looks like a low-end iPad and will include a built-in battery, speakers and a FaceTime camera oriented for a horizontal landscape view. The square device, which includes a roughly 6-inch screen, has sensors that let it change the interface depending on how far a user is from the screen. It will also have attachments for walls, plus a base with additional speakers so it can be placed on a table, nightstand or desk.

Apple envisions customers using the device as an intercom, with people FaceTiming each other from different rooms. They’ll also be able to pull up home security footage, control their lights, and videoconference with family while cooking in the kitchen. And it will control music throughout the home on HomePod speakers.

The device will work with hundreds of HomeKit-compatible items, a lineup that includes third-party switches, lights, fans and other accessories. But the company doesn’t plan to roll out a dedicated app store for the product. Given the lack of success with app marketplaces for the Vision Pro, Apple Watch and Apple TV, that’s not too surprising.

The success of this device is still far from assured. Apple’s recent track record pushing into new categories has been spotty, and its previous home products haven’t been major hits. The company also isn’t breaking a lot of ground here. Though the product will likely be more polished and feature-packed than its Amazon and Google counterparts, Apple is still playing catch-up. Moreover, you also could replicate much of the experience by just buying a $350 entry-level iPad and a home wall mount from Amazon.

If the product does catch on, it will help set the stage for more home devices. Apple is working on a high-end AI companion with a robotic arm and large display that could serve as a follow-up. The company could also put more resources into developing mobile robots, privacy-focused home cameras and speakers. It may even revisit the idea of making an Apple-branded TV set, something it’s evaluating. But if the first device fails, Apple may have to rethink its smart home ambitions once again.

Apple gears up to launch a new AirTag four years after the first model. In May, I reported that Apple is working on a new AirTag — code-named B589 — for release around the middle of next year. That accessory has now progressed in manufacturing tests, and Apple is getting ready to bring it to market. I’m told the new version will look similar to the current model, but offer better range, bolster the onboard wireless chip and improve privacy.

That includes making it more difficult for someone to remove the speaker from the AirTag. Since the device launched in 2021, some people have unfortunately used the product as a tool for stalking — and removing the speaker makes it less likely for someone to discover a hidden AirTag. Apple is contending with lawsuits over the device, and it’s in everyone’s interest to make the new model more tamper-proof.

The AirTag is one of numerous new Apple devices coming next year. In addition to the smart home display and software upgrades, you should expect to see updated versions of the iPad Air, entry-level iPad, MacBook Air, Mac Pro, Mac Studio and iPhone SE. That’s not to mention the usual iPhone, Apple Watch and MacBook Pro refreshes that are coming in 2025.

(Answers to the below are shown in the subscriber-only version of this newsletter.)

Q: What’s the latest news on the Apple Watch?Q: What’s included in the latest iOS 18.2 beta?Q: Why did Apple rely on Belkin to make an overhead Vision Pro strap rather than creating its own?

Email me, ask on the Power On Discord, or you can always send me a tweet or DM @markgurman.

I’m on Signal at markgurman.01; Telegram at GurmanMark; or ProtonMail at [email protected].

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