Trump Threatens 25% Tariffs on Apple
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From the heart of where innovation, money, and power collide in Silicon Valley and beyond, this is Bloomberg Technology with Caroline Hyde and Ed Ludlow. ♪♪

Live from New York, this is Bloomberg Technology and we get straight to our top story. President Trump taking aim at Apple yet again, threatening a 25% tariff on the iPhone maker if they don't produce the devices in the United States for US consumers.

Shares, as you see, down yet another 2.7%. We're dropping below that $3 trillion market capitalization, and we bring you the analysis. Bloomberg's Mike Sheppard joins us. We have seen Tim Cook in the line of fire from Donald Trump for at least a week now. How does he respond, Mike?

Well, this is a tough one for him, Caro, because the president's dander really is up here. Last week, he singled him out during an appearance with reporters while he was traveling to the Middle East. And he noted Cook's absence during a forum with other CEOs in Riyadh, where he

called out, "Tim Cook, Tim Cook, do I see?" And he said, "I don't think Tim is here." And then later, he pointed to Apple's intention to move some of its China-based iPhone production for the U.S. to India to avert what would be higher costs related to tariffs on goods coming from China.

Trump wants to see something different, though. He wants that production not to go to India, but to the U.S. He would like to see domestic production move here. And whatever Tim Cook has been promising the president, with whom in the past he's had a good relationship, clearly wasn't enough. And remember, Tim Cook did meet with Trump at Mar-a-Lago after the election, and he attended the inauguration, too. He had a visible spot along with other tech leaders, uh,

and the capital rotunda on that day, January 20th, and we're not seeing for Tim Cook the results that he might have hoped for in this relationship with the president. The signals have been there, Mike. As you mentioned, the little problem with Tim Cook that Trump spoke of last week being that of shifting manufacturing from China to India, and then the FT with a report showing that that India manufacturing focus had been being doubled down on in the last week. Broad

to speak to the relationship, therefore, that we see of Tim Cook with the U.S. and investing here? Because already he had promised $500 billion. He had promised $500 billion, and it was not insignificant. And he had talked about moving some iPhone-related chip production here and other efforts here, including training and other works. But it wasn't enough. Trump is really about...

the symbolism. He wants the iconic products, including the iPhone, but others as well, made here in the U.S. But one of the problems is, of course, the workforce. We don't have the workforce. And then the cost. Do we have the workforce that is prepared to do the kind of work

high-tech, high-skill assembly of these phones that you see en masse in China and in India and in Vietnam. We really don't. And Tim Cook has made this point over and over again, as have other chief executives when they talk about the challenge of bringing production here to the U.S. So it is a difficult moment for Tim Cook in trying to figure out this relationship with the U.S.,

The cost, there are estimates all over the place about how much more an iPhone would cost if it were produced here from beginning to end. One analyst out this morning saying as high as $3,500 per unit. That may be high, but it gives you an idea of just how much more of a cost there may be for moving production here, which, Carol, it's important to note, would take years to reroute all those supply lines, find that land, et cetera. Well said.

Mike Shepard, we appreciate it. Of course, that being Dan Ives and Wedbush, who called about a $3,500 price tag. And indeed, he called it a fairy tale. Analysts calling this an absurd directive coming from the president. Let's get more analysis with Gil Luria, DA, Davidson Managing Director, joining us now. You have a buy rating on Apple, a $250 price target. Does any of that change if they indeed have to bring production here to the United States?

It does not. This is really just a matter of timeframes. Yes, if we needed to make an iPhone right now in the US, it would be very expensive. But can we do this in five years? If Apple was to commit to bringing production of iPhones to the US in five years and invested its considerable resources into doing that, it wouldn't be that much more expensive.

And that's what the president is looking for. And I'm surprised that Apple is at a point where they're negotiating this badly that the president has to go out publicly and threaten them. You've seen other technology CEOs do a much better job

of giving the president what he wants and moving forward and making those commitments. And I'm surprised that Apple is continuing to be humbled. Let's not forget, this has been a humbling week for Apple. At Google I/O, we've seen that Google is way ahead on AI on Android. Then there was the embarrassing announcement from OpenAI and Johnny Ive

Apple needs to do a better job of negotiating because if it does commit to a long-term path, it could make iPhones in the U.S. at a competitive price. It doesn't have to do it today. How, Gil? At the moment, we're hearing that we don't have the skill set in the United States. We don't have the ecosystem of supply chain here. It has taken decades to build it up in China. It's taken years to build up in India. What do they have to go about sorting here in the United States in that three- to five-year time frame?

Yeah, that's exactly right. It is a skills issue. But if you give them five years, we can hire internationally. We can develop the skill here. Apple is sitting on $50 billion of cash, and it produces $100 billion of cash every year. That is enough to accomplish great things. And if the great thing Apple needs to accomplish right now is to develop that skill set domestically, then it should be focusing its resources on that.

Gil, jumping in then, the opportunity cost of diverting that cash away from R&D, boy, they have to catch up in terms of generative AI and integrating it there, but instead having to focus on production here in the United States, is that not an opportunity cost that does indeed drag down the price target, at least for the stock?

It is a headwind and that's the headwind they're dealing with this year. That's why the stock is down so much is that they've been caught in this crossfire and they didn't need to. Again, all they needed to do is make some early commitments, start down a path,

And then this path, either it leads them to a successful outcome or they have a fallback of saying, okay, let's just absorb the 25% tariffs from India. That's why when people say it'll cost $3,500 to make an iPhone in the U.S., that's not a real thing. The only possibility here is that they're going to say, okay, even in a five-year time frame, it's going to cost us so much to make an iPhone that we'll absorb the 25% tariff

from India and absorb it through higher prices, slightly lower margin and push it down to vendors. So this is really just a matter of them doing a better job negotiating moving forward. But yes, absolutely. This is a drag on the stock. It has been this year. And until they find a path forward,

and get out of the headlines, it'll continue to weigh on the stock. So Gil, if you're saying it's not a real thing to estimate what an iPhone made in America would cost, are you anticipating that they do stomach a 25% tariff coming on just continuing to import? Or are you anticipating that they do go about a three to five year investment plan in the U.S. when, look, the term of President Trump isn't five years?

I think they need to proceed on both paths. Again, this year, they can't make iPhones in the U.S. now this year and not in the next three years. So they are going to have to try to negotiate that tariff down or absorb it in the short term, which is what they're doing, and then proceed on both paths. Because to your point, this administration isn't going to be in power forever, and they're going to have to find out over time what it is going to cost.

I think that we're also minimizing, I think that I've heard some comments minimizing the changes to manufacturing in the U.S. Manufacturing is going to change dramatically over the next few years in the U.S. for a variety of reasons. Because labor has become more expensive in China and Taiwan, because robotics are getting that much better. So in a five-year time frame, they may be able to accomplish these goals. They have to pursue that now. They don't have a choice.

But at the same time, they need to use that as leverage to go back to the administration and say, hey, give us five years to do this. Let's take off that 25% on India because we are making a firm commitment to the five-year timeframe. And that'll buy them the time to find a good resolution. That is possible.

And Mr. Cook is a skillful enough negotiator that he needs to be able to accomplish that. But how frustrating do you think it is for investors, for yourself, for indeed Tim Cook, to just think about the inefficiencies that have to be built into the business model now, even if they do bring over component building here in the U.S.? It's not going to be an easy task, and they're likely to have to still assemble in China and India for the time being. Well, it's a reality.

I think sometimes other countries and some CEOs are a little bit in denial over the fact that President Trump got 77 million votes and believes he has a mandate to make these very profound changes to the global order, including changing the way the global supply chain works. This is not going to change in the next three years. This is something that all these companies, and by the way, these countries have to acknowledge

and move forward with. And we, as analysts and investors, have to adapt to it. We can't go back in time and change the outcome of the U.S. elections. This is the administration. This is its policy. And we have to adapt as investors, which means that Apple is going to have a choppy year.

for sure. And other companies that try to negotiate badly are going to have choppy years. That's why we favor companies that have handled this better. Microsoft, Amazon have handled this a lot better. Their business is more resilient to this, and they should be better able to get through the rest of this year and the rest of this administration.

All eyes on the political navigation of Tim Cook next. Gil Luria, great to have you, DA Davidson. Coming up, renowned computer scientist and AI developer Andrew Ng. He's going to be joining us to talk about his new VC fund, but also this talent, the skill issue that we're just talking about with Gil Luria, can that be brought here to the United States?

Let's just take a quick check on the markets ahead of that, though, because the Nasdaq is under pressure as we dial up tariff anxiety. Nasdaq off by more than a percent. We see the semiconductor index also off by 2%. Nvidia gets sold, but Apple in the line of fire. This is Bloomberg Technology.

Discover how one of China's largest financial services companies serves 240 million customers with AI-powered solutions. Hear from Ping An's co-CEO and chief scientist. We're on a goldmine of data, integrated to provide tailored solutions to our customers. Public domain tax, 3.2 trillion tokens, 7.5 billion images. Tune in to our technology-powered growth podcast.

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the big news today it is apple shares trading lowers investors react to president trump's threat of a 25 tariff on the company if it doesn't bring more iphone production to the united states but doing that requires skills many american workers currently do not have we are pleased to welcome to the show andrew his world-renowned computer scientist thought leader and also the co-founder of online education company coursera

Eng is also announcing his second fund targeting AI startups. Andrew, it is wonderful to have your voice on the show. And before we get into really the AI talent that you've been building, I just want to get your take on the labor skills that are currently needed in the U.S. for this manufacturing pivot. If we were to bring iPhone manufacturing to the United States, could we do it in a near enough time frame?

It will take years to develop the talent base needed to bring a lot of advanced manufacturing back to the United States. I think there's a certain logic to making sure that advanced manufacturing is under the control of the US and our allies. And that's important, not just us, but also our trusted allies.

Several years ago, I actually visited Wisconsin where the first Trump administration and Foxconn had mightily put effort into WisConn Valley, which is an attempt to move semiconductor, sorry, move display manufacturing, panel display manufacturing to the United States in Wisconsin. And frankly, it was a great effort

But it really struggled to gain traction because it's very difficult to find a talent in Wisconsin or in the US more broadly with the advanced manufacturing skills. Manufacturing today is often a high skill requiring knowing about robotics, knowing about software. It's not just people assembling little things with their hands anymore. And we've got a lot of work to do to grow that talent in the US. Where could we bring in from?

Andrew, where have you seen that skill set among allies that can be brought in? Because in many ways, it's feeling as though we're not bringing in talent from abroad at this moment either.

I think that in the case of manufacturing talent, clearly China has a lot of it. I think Taiwan, interestingly, also has a lot of manufacturing talent. So I feel like, and obviously also Japan, I think some parts of Korea as well, especially when it comes to semiconductors. But so many of our allies do have skilled manufacturing talent, but how to work with them to import some of those skills to the U.S. is, I think, something still to be figured out.

And then on the other end of the spectrum, they alluded to, I think one of the best things the US could do to ensure American competitiveness in AI and other advanced technology fields is to, frankly, support our universities and support high-skill immigration. How have you been considering the cuts to science funding in particular? Is that impacting your sector, the sector you want to invest more in with your second fund?

So, AI Funds Venture Studio, we work with many entrepreneurs to build companies. And I feel like over the last many decades, America led the world in science and technology. And this is an era when we have strong institutions like the National Science Foundation and the NIH that funded open research.

One thing that I think not many people fully understand is when, say, the National Science Foundation funds a researcher, they write a research paper that's publisher-free, anyone on the internet can read it. Yes, it helps our adversaries. Yes, it helps the whole world. But the country it helps the most is America.

Because when an American researcher on American soil publishes a paper, that diffusion of knowledge is fastest within America. And yes, other countries, including our adversaries, can benefit from it too. But that openness of research helps the country that does it the most. And so I think America's ability to attract amazing international... I was once an international student myself on an F1 visa, and I came to the U.S. to study, and I ended up

and hopefully making some positive contributions to this country. I think welcoming through immigration would be an important piece of ensuring American competitiveness. Well, let's talk about your positive contribution when it comes to raising $190 million second fund to invest in AI talent and startups and sort of co-found them in many ways. What sectors are you looking at and are they US-built companies alone?

We are building, the majority of companies we build are in the US, but we are also working with businesses in Japan, Taiwan, Korea and so on. AFN is a venture studio, so what I decided was, unlike a traditional VC, I don't want to be competing for or chasing deal flow, so we exclusively work with entrepreneurs to co-found companies. What that means is my team is alongside the entrepreneur, we're writing code, talking to customers, debating what features to build,

And because my team is fortunate to be close to the AI technology, it lets us look across many different industry sectors, recruit great AI talent and apply our technical expertise to all sorts of different sectors where AI can be applied.

We'll come back as that portfolio continues to grow. Andrew, it has been a joy speaking with you. Congratulations on the new fund. And thank you for sharing your expertise, Andrew, and, of course, managing general partner at the AI Fund. He's also founder of Deep Learning AI and, of course, co-founder of Coursera.

Sticking with artificial intelligence, Anthropic, well, it's rolling out two new versions of its Clawed AI software, including a long-delayed update to the high-end Opus model. This is as the startup really vies to stay ahead of a crowded market. Mike Krieger joined Ed a little earlier, Anthropic's chief product officer.

Our only constraint for this launch was we want it to be available to as many people as want it on the launch day itself as well. And so it'll be generally available. It'll be in Cloud.ai for our more end users. It'll also be available in the API for usage on day one. And then as people scale up their usage, there's often capacity and rate limit conversations that we need to have just because the models aren't really in demand. But in terms of being generally available, it's day one. Coming up.

Tech IPOs. When we're back, we'll discuss a Brianne Lynch equity zone. This is Bloomberg Technology.

Now, as the broader market sells off, shares of Mountain, of Hinge Health, both trading higher after making their public debuts just yesterday. Their success is giving hope to other tech startups that have been waiting to go public, in some cases, for many years. Let's talk about it all. Brianne Lynch is with us, head of market insights at EquityZen, one of the largest pre-IPO platforms for private shares. It's in the secondary market. And, Brianne, look, I'll

But are we seeing the creaking open? Is it companies that have to come to the market or are we going to start to see companies that just want to come in this environment?

Thanks for having me. Now, if you had asked me a few weeks ago if we would be seeing positive IPO activity right now, I would have said no. But these few companies that have bit the bullet and decided to go out eToro last week, Hinge Health and Mountain yesterday are performing well and are outperforming the market. So I think, you know, we're not in a market environment where

we'll see the floodgates open up, but for companies that need to go public for liquidity or other reasons, or feel like they have a really compelling story, they might just be brave and decide to, despite the volatility there is. What are the story necessities? It's interesting that CoreWeave now really outperforming where it priced, despite the initial volatility. So we've got an AI focus, you've got really services and consumer-focused businesses thus far. Does it have to be there, or

Could we even go into broader hardware and deep tech? I think we can go broader into hardware, deep tech. There's other names that are on our radar. Cerebrus one who has filed and has been on the IPO pipeline for some time now. But what's interesting is the companies we've seen recently, you have a FinTech, you have a health tech, you have an ad tech company.

very different companies, but there are some similarities. These are older companies. They're over a decade plus years old. So there's a lot of investors and early employees who have been waiting a very long time for liquidity. Surprisingly, when you look at the two from yesterday, these are unprofitable companies as well. So it's a little bit surprising to see how well they've been received, given that they're not yet profitable. They're almost there. But it seems like maybe that's not a requirement now for public market investors when you're

achieving 35-plus percent growth rates and hundreds of millions of dollars in revenue. So I think there's a similar story we're seeing across some of these sectors. And another thing to note is these have been down-round IPOs, you know, the two yesterday, both raising—

in their IPO at valuations below their last round of private funding. And especially for a lot of these companies that last raised in 2021, 2022, I think that's going to be a reality in the market. So just some commonalities and things that we may expect to see as others enter the market. Brianne, let's talk about some of the pressures that can be taken off by the secondary market, because liquidity for employees that have been there a long time, liquidity for the venture that's backed them for a long time, it is actually getting far easier in the secondary market, right?

Absolutely. And what we've seen is the VC ecosystem as a whole is at this really interesting inflection point where it used to be raise capital from LPs, deploy that into early stage startups, have exits around the 10-year time horizon, return capital, rinse, repeat, rinse, repeat. That crucial...

exit at the 10-year timeline piece is not happening. And that's really driving more secondary activity. You saw Precursor Ventures gave a stat a few weeks ago that they expect 75% to 80% of distributions to LPs to be from secondaries over the next five years. And that's a huge number. And it really speaks to the liquidity crunch that we're seeing in the venture market. And secondaries are certainly becoming a larger avenue to address that.

Briefly, though, we've seen an interesting tech focus from VCs where they convert to be able to buy more on the secondary market, maybe even some on the public market, too.

Yeah, absolutely. So we've seen this trend of more VCs registering as RIAs. Lightspeed is the most recent example of a VC firm that's done that. And that really allows them more flexibility to invest more than 20% of their portfolio into both public companies and secondaries. And while we've talked a lot about

you know, the secondary need on the sell side. There's also a secondary need on the buy side where these AI companies, they have just so much capital available to them. It's hard for most investors to get access to a funding round or get the allocation that they're looking for in, you know, the latest AI startup. So they're also coming to the secondary market to either build or establish new investments.

Brianne Lynch, great to catch up with you. Thank you. Head of Market Insight at Equity Zen. Meanwhile, we check back on the big story of the day. Apple shares lower. Will we see a 25% tariff if they don't move more U.S. manufacturing for the iPhone? This is Bloomberg Technology.

Developers like you are building the future, but you need the right tools to move fast and go further, right? That's where Microsoft comes in. With tools like GitHub Copilot, VS Code, and Azure AI Foundry, you have everything you need to push the limits and bring your ideas to life faster. And with security, compliance, and responsible AI built in, you can focus on what matters most, building the next big thing. Learn more at developer.microsoft.com.

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