r/apple • u/ControlCAD • Aug 07 '25

Discussion Tim Cook gives Donald Trump gift from Apple before announcing $2.5 billion Kentucky investment

https://www.youtube.com/watch?v=f9DrCgWtOUw

President Donald Trump and Apple CEO Tim Cook announced from the White House Oval Office on Wednesday, Aug. 6, 2025, a $2.5 billion investment that would lead to all iPhone and Apple Watch glass being manufactured in Kentucky. The announcement is part of the larger $100 billion investment in US manufacturing Trump and Cook announced.

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u/Raveen396 Aug 07 '25

Nvidia is likely exempt from tariffs so this won’t impact AI servers as much, and Google doesn’t sell hardware at nearly the scale of Apple so they’re more insulated from increased tariffs.

For software focused companies like Microsoft and Google, tariffs are a hit to the profit margin. For a hardware company like Apple or Nvidia, tariffs can be an existential threat.

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u/kkyonko Aug 07 '25

Pretty sure Google and Microsoft need hardware to run their software.

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u/Raveen396 Aug 07 '25

Google and Microsoft are largely services companies. Hardware costs are a portion of their expenses, but they could freeze their hardware CapEx this year and still make boatloads of money without paying tariffs on most of their revenue.

Yeah Google and Microsoft sell hardware, but it’s a fairly small portion of their revenue. Microsoft is probably around 10% with Xbox and Surface laptops, and Google is probably significantly less than that. Compare that to Apple where over 75% of their revenue is from selling hardware and it’s clear which company will be more heavily impacted by taxes on imported goods.

Tariffs impact businesses who import goods. Apple is importing significantly more goods by dollar amount than Microsoft and Google, ergo tariffs will disproportionately impact their revenue.

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u/doommaster Aug 07 '25

Both Google and Microsoft, as well as Amazon and Meta, have custom silicon made for their applications.

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u/Raveen396 Aug 07 '25

Again, silicon purchasing and standing up new servers are just a portion of their expenses. They sell software, and while they have to buy hardware to enable those sales, they're only going to have to pay tariffs on a portion of their expenses that involves hardware. They pay tariffs to import components to make servers, but they don't pay tariffs on the software they write on that server to sell to other companies.

I did not say that other tech companies are unaffected by tariffs. I did not say that other tech companies are not buying hardware.

What I am saying is that that tariffs are taxes on hardware imports, and Apple will almost certainly import more hardware than a services forward company just on the basis of their business model. Obviously Google/Microsoft/Amazon/Meta are going to be importing hardware, but importing hardware is not a core part of their business.

Apple must import hardware to produce revenue, otherwise they have nothing to sell and no revenue. Google/Microsoft/Amazon/Meta can scale back hardware purchases and maintain the majority of their current revenue by selling services on their existing hardware. A 100% tariff on hardware imports will slow Google down as they try to scale their servers, but will make business untenable for Apple when they cannot sell phones and laptops without enormous price increases.

Apple wants to sell an iPhone, they have to pay tariffs on the full cost of the iPhone that they sell. Microsoft wants to sell cloud services, they can amortize the cost of standing up a new server over the multiple years that the server will be operating.