The trade war between the United States
and China has most big tech companies really worried about whether
tariffs could cut into their bottom lines. But one company was able
to thread the needle between a volatile American president and the
world’s biggest consumer market. More than any other tech leader, Apple
CEO Tim Cook has spent a lot of time charming the Trump administration,
and it seems to be paying off. President Donald Trump and Cook’s
relationship really started after Trump’s election win in 2016. Donald Trump took a few shots at
Apple during the campaign, but as soon as he was elected, he told
The New York Times in an interview, one of the people who called to
congratulate him was with Tim Cook. This is Kif Leswing, Tim Cook’s
office reaching out to Donald Trump, you know, saying congrats
on being the president. I hope we can work
together, kind of stuff. That’s how the
relationship started. So after Trump’s win, he called the
CEOs of several tech companies to meet at Trump Tower. Apple CEO Tim Cook was one of them. President Trump pulled together a lot
of business leaders w ith a surprising number of high
tech leaders there This is Jeff Sonnenfeld. He’s a senior associate dean
for leadership studies at Yale University’s School of Management. They all came. He
wasn’t yet president. He is president-elect. Most didn’t know him. Very few supported him. And that’s true of the U.S. business community in general, not
just Silicon Valley types. They still came,
which was interesting. Tim Cook used that as an
opportunity to start to forge a relationship. In a message to Apple
employees, Cook explained why he showed up to talk to
Trump despite supporting Hillary Clinton. According to TechCrunch, Cook wrote, ‘he
never found being on the sideline a successful place to be.’ And, ‘the way that you influence these
issues is to be in the arena.’ Since the meeting, Cook continued to
cultivate close ties with Trump and his family. The Apple CEO met
with Trump over dinner at his New Jersey golf course
twice since 2017. He’s attended state dinners hosted by the
president and he has a good relationship with the Ivanka and
Melania, according to White House officials. President Trump likes to break
bread with people and he relaxes over food and other
people relax over food. So it’s food and the golf course
and those kind of scenes that are ways that you get away from wearing
the formal uniforms and get off the pillars of office. In February 2019, Cook joined
the American Workforce Policy Advisory Board, a group dedicated to
getting the unemployed into the workforce. And since 2017, Cook has been
a part of the White House Office of American Innovation, a
group focused on improving quality of life and spurring job creation. The boards are led by
Ivanka Trump and Jared Kushner. Cook and Ivanka Trump even traveled
to an Idaho elementary school last November for a photo-op. Apple had donated iPads to all
the teachers and students in the district. This is really Tim
Cook working a personal relationship with Trump. And as different issues
unfolded, when Tim Cook wants to take a different position, say, on
climate change or on immigration policies, he’ll give a heads up
alert to the White House. And he’ll often do that through
Ivanka Trump or more often through Jared. But so far as I
know, there are no remote financial arrangements behind this. Apple claims it doesn’t engage in politics
and it doesn’t have a PAC, something Cook has
said shouldn’t exist. Most companies in Silicon Valley spend
quite a bit more in formal lobbying, whereas Apple spends very
little in formal lobbying. It has more than the personal
diplomacy rather than the K-Street bandit is working over
the White House. Nevertheless, Cook keeps in touch
with Trump, making calls and scheduling meetings
when appropriate. So he has Trump’s ear when
government policy collides with Apple’s corporate interests. The president says that Apple CEO Tim
Cook is a great executive, at least in part because Cook
calls him on the telephone. The only one that calls
me is Tim Cook. He calls me whenever
there’s a problem. He’ll call. That influence is about to
be put to the test as Apple applies for exclusions from a
new round of tariffs. Big American companies are caught in a
catch 22 when it comes to China. First, the United States has
about three hundred twenty nine million people. That makes it the third
most populous country on earth. China has about 1.3 billion people. That means in order to keep
growing, most American companies need access to Chinese consumers, and
for companies that rely on manufacturing, the situation is
even more thorny. It’s often cheaper to make or
assemble products in China and then ship them to a state like Ohio than
it is to make those products in Ohio in the first place. President Donald Trump’s trade war puts
those companies in a tight spot. In summer 2017, Trump unleashed
tariffs on billions of Chinese imports. Now, after more than a
year of back and forth tariffs between the U.S. and China,
companies making consumer tech hardware, like Apple, are going to get
hit with tariffs if the U.S. and China can’t close on
a new trade deal. So Apple has become the poster child
for the trade war for two main reasons. One, they get a substantial
amount of their sales from mainland China. So as a market and
having access to the market, that is critical for Apple. But there’s a double whammy here,
because Apple also does the majority of its production
in China as well. And through its production partners,
including Foxconn, you know, they employ millions of
people in China. New tariffs went into effect on September
1st, 2019 in those hit some Apple products. And now Apple
is asking the administration for exclusions from that
round of tariffs. But in the meantime, the
United States Trade Representative Office has also already delayed some of
the tariffs on certain consumer items until December 15th. 2019. The delay included cell
phones, computers, video game consoles, some clothing products and certain toys,
which Trump said was decided to help consumer spending
during the holiday season. For Apple, the December 15th tariffs means
a 15 % tax on Chinese imports, which would force Apple to
either raise prices or accept lower margins on core products
sold in the U.S.- Think iPhones and MacBooks. They’re very anxious that they get a
carve out if there are tariffs against products produced in China, because
that’s where most of the Apple phone production is still. They have very effectively explained to
President Trump that he would be helping Samsung. The federal government now has to
decide whether Apple gets another tariff exemption on core products. Cook has already appealed to Trump,
even though the decision will be made by a trade representative. Tim was talking to
me about tariffs. And, you know, one of the things that
he made a good case is that Samsung is the number one competitor
and Samsung is not paying tariffs because they’re based
in South Korea. And it’s tough for Apple to
pay tariffs if they’re competing. Now, the problem was that
Samsung, a competitor, good competitor, wouldn’t be paying tariffs and Tim Cook
would have got to help him out short -term with that problem,
because it’s a great American company. Samsung is in South Korea. Not fair. At the beginning of
the trade war, Apple seemed confident it could avoid tariffs. In a June 2018 interview, Cook
said he didn’t believe the iPhone would get hit. The New York
Times reported his confidence came from the assurances within
the Trump administration. If you listen to what Tim Cook
has to say about the whole U.S.-China trade relations, he is very carefully
dancing around that core topic of saying, look, these two
economies are intricately linked together. We have to come to a resolution. This is not good for
China or the U.S., that is good for Samsung, which
has its production elsewhere in Asia. But the December 15th tariffs
could be worse for Apple. It’s really important for Apple to
protect that supply chain in China in addition to just
selling iPhones there. When Trump signed his tax reform
bill in December 2017, Apple repatriated hundreds of billions in overseas
cash and a lower tax rate, saving the company an estimated
27 billion dollars in taxes. A month later, Apple announced its
plans to pay thirty eight billion dollars in taxes. Apple detailing how to accelerate
its pace of U.S. investments and job creation, saying it’s
going to make a 350 billion dollar contribution to the U.S. economy over the next five years. Trump got wind of Apple’s plans
and tweeted on January 17th 2018. I promised that my policies would
allow companies like Apple to bring massive amounts of money back
to the United States. Two weeks later, Trump cited Apple in
his first State of the Union speech. Apple has just announced it plans
to invest a total of three hundred and fifty billion dollars in
America and hire another twenty thousand workers. Besides one small factory in Ireland,
Apple doesn’t own and operate any of its manufacturing. Instead, it contracts with manufacturers
who assemble the company’s products and most of
them are in China. Tim Cook has been the architect of,
under Steve Jobs his era, of taking manufacturing out
of the U.S. and and outsourcing it to China,
to Foxconn and others in China. Foxconn, of course, which is a
Taiwanese company, but it’s located so much of the manufacturing
in the mainland. Meanwhile, Trump has focused on getting
Apple to make its products in the U.S. He’s always been
about American manufacturing, so he’s criticized Apple a few times over
its practice of doing the vast majority of its
manufacturing in China. You got to start
doing it over here. And you really have . I mean,
you’ve really put a big investment in our country. We appreciate
it very much. Trump telling The Wall Street Journal
that Apple CEO Tim Cook has committed to building three big manufacturing
plants here in the U.S. Earlier this year, Apple announced a
new version of the Mac Pro. In September, the company announced it
would assemble them in Austin, Texas, after it received tariff exemptions on
10 of the 15 parts it needed to assemble the machine. Cook said in a statement we
thank the administration for their support enabling this opportunity. Steve Jobs would have been a
horrible CEO in this moment because think about what he would have to
deal kowtowed to both Beijing and Trump. Can you picture in a
million years Steve Jobs threading the needle in the way
that Tim Cook has. He literally is in a position
where Chinese carriers are the lifeline for his business in the second
biggest economy in the world. And they manufacturer a lot
of the phones there. He has to live with that
reality while simultaneously convincing Mad Dog Trump that he’s going to hire
more people and build more things here. And he’s done
it incredibly well. Like, could you imagine Steve
Jobs pulling that off? I really can’t. So maybe what was
needed right now is not this beacon of innovation. Maybe it’s competence
and logistical savvy and calmness. And that is what Tim
Cook has brought to the table. That’s why he’s added about six
hundred billion dollars in market cap to this company. Cook, for the most part, has been
able to steer away from Trump’s public attacks. President tweeted about his
new iPhone quote to Tim, The button on the iPhone was
far better than the swipe. Despite Trump’s iPhone critique, Sonnenfeld
says Cook has found the perfect combination when it comes
to his relationship with President Trump. Well, it’s a
perfect recipe for Apple. I don’t know that it’s a perfect
recipe for the nation, but it works for him. What Cook does is he
retains a seat at the table. He presses, you know, what he thinks
he is or what Apple’s point of view on the policy is. And, you know, on those on the
stuff that he disagrees with Trump, he makes his point known on that. He’s issued companywide memos on
the Paris Accords and various immigration related policy moves
from the Trump administration. But he never he
never makes it personal. There was an opportunity to humiliate
the president in one of these advisory council meetings. You may remember he turned to Tim
Cook and referred to him as Tim Apple. We appreciate it
very much, Tim Apple. And then on his Twitter icon
is Tim Cook replaced his name with an apple. Now that was ambiguous. There are ways where you could see
that he was maybe having a little bit of a spoof with the president,
but the president and others could see that he was making fun of
himself and somehow it diffused the situation pretty effectively. In part because of situations like
this, Cook has cultivated what Sonnenfeld calls personal respect, and
that’s what has helped him avoid negative criticism
from the president. Tim Cook was quick to see that he
doesn’t want to be on the wrong side of public attacks
from President Trump. And there must be a way you can
talk with him privately when you have issues. And he’s found that
pipeline both through one-on-one discussions, not using collective action,
not using lobbyists, but President Trump, the personal respect is
very important to him, and he’ll show that respect. In order to cultivate that personal
respect, Cook has met with Trump face-to-face, which Sonnenfeld says is
how Trump prefers to do business. He likes to meet in person,
and he has a, despite the anger at these rallies and the language
that’s used and what people will talk about the divisiveness,
on one-on-one sessions. He can be disarmingly charming
and he knows that. And Tim Cook responds to that. I don’t know how charming Tim Cook is,
but I think he’s a very good listener and he doesn’t
have a personal agenda. There’s no grandiosity or
egomania of Tim Cook.