Apple Adds $100 Billion to American Investment Plans

If millions and millions of Americans are to be screwing in little screws, as US Commerce Secretary Howard Lutnick so memorably put it, billions in investment will be needed. Thankfully, Apple has all that and more to spare. 

On Wednesday, the Cupertino, California-based company announced, along with the White House, that it would invest $100 billion to expand its domestic manufacturing capacity. For those keeping score at home, that’s in addition to the $500 billion in domestic investments Apple announced earlier this year.

For a Few Hundred Billion Dollars More

Perhaps no company in America has been caught in the crossfire of the trade war more than Apple. The vast majority of the company’s manufacturing capacity has long resided in China, a relationship increasingly viewed (at least by trade hawks) as a little too mutually beneficial for comfort. Apple saw some $770 billion wiped off its market cap in the four days following April’s “Liberation Day” announcement of sweeping import tariffs and the stock has yet to fully recover.

Still, for a behemoth, the company is pretty nimble. When China was under trade-war fire earlier this year, Apple doubled down on its presence in India, now the source of the majority of iPhones sold in the US. When India came under fire this summer (which intensified again on Wednesday, with tariffs doubled to 50%), Apple benefited from an all-important exemption for electronic devices. So far at least, according to a third-quarter earnings report last week, the maneuvering has helped Apple avoid a worst-case trade war scenario:

• In a call with investors, CEO Tim Cook said tariffs cost Apple roughly $800 million in the third quarter, less than the $900 million that Cook said the company expected to incur during its second-quarter earnings report in March.
• For the fourth quarter, Cook said Apple is projecting $1.1 billion in tariff charges, though the CEO stressed that, in addition to most US-sold iPhones being sourced from India, most US-sold Macs, iPads and Apple Watches are now made in Vietnam.

Supply Chain of Command: More and more of that supply chain could soon be linked to the US, too, with Apple on Wednesday saying that its $100 billion pledge will help it reshore the production of components. In February, the company said its $500 billion US investment will go toward a server manufacturing facility in Houston, increased spending on domestic suppliers and a “Manufacturing Academy” in Detroit in conjunction with Michigan State University, slated to open later this month. Sure, $600 billion is a lot of dough. But if it means avoiding more $1.1 billion quarterly tariff charges, it’ll pay off in about (and don’t check our math here) 500 fiscal quarters or so.