The White House’s Kevin Hassett insists buyers will not have to pay more for iPhones because of tariffs
Trump advisor Kevin Hassett has played down the “tiny little tariff” on firms such as Apple and strangely insists consumers won’t pay more for iPhones.
In announcing a 25% tariff on all imported iPhones, Trump took the unusual step of admitting it would be Apple that pays, rather than his usual false claim that foreign countries will. Now in repeating this, National Economic Council Director Kevin Hassett has treated tariff complaints as a joke — and also insisted that Apple will not raise prices.
“I’m kind of like the person in an airplane that’s getting walloped over the head by everybody,” he said in an interview with CNBC, “where everybody says, ‘Oh, like, we’re never going to be able to do anything if we have this tariff, it’s going to be a disaster if we have this tariff.'”
In a confusing interview, he said both that CEOs come in to complain like this, but then “tell me the opposite because they don’t want [their] bonds to be downgraded.”
“So the point is that everybody is trying to make it seem like it’s a catastrophe if there’s a tiny little tariff on them right now,” he continued, “to try to negotiate down the tariffs.”
Hassett did admit that it was “impossible to move things overnight,” and so that Apple could not immediately reshore iPhone production. But he would not confirm whether the Trump administration would grant a reprieve if Apple were to announce a years-long plan to move manufacturing to the US.
“We’ll see what happens,” he replied, “we’ll see what the end game is, but we don’t want to harm Apple.”
Apple has already said that it expected to spend $900 million solely on tariffs in its June quarter. But that was before the latest 25% tariff, which investment firms like Morgan Stanley believe mean Apple will have to raise prices.
Trump has ordered Walmart to not pass on the costs of his tariffs to consumers, and even Home Depot which voluntarily said it would do this, has admitted it may stop stocking heavily-tariffed items.
Apple has seemingly not received such an order, but Hassett, as director of the National Economic Council and with a PhD in economics, doesn’t see a problem. Apple simply will not pass on tariff prices to consumers, he said.
“And in the end, if you think that Apple has a factory someplace that’s got like a set number of iPhones that it produces, and it needs to sell them no matter what,” he continued, “then Apple will bear those tariffs, not consumers, because it’s an elastic supply.”
Supply elasticity refers to how quickly a company can respond to price changes. Specifically, it regards how Apple could theoretically produce more or fewer iPhones depending on changes in demand.
Apple can and annually does revise its manufacturing orders, shifting production to match demand. However, this has no connection with whether Apple will bear the 25% cost imposed by Trump, reportedly as punishment for Tim Cook not attending an event.
It also has no bearing on the tariffs that the White House has prejudged will come after the current national security investigation into semiconductors.
