By Tripp Mickle
With the threat of tariffs on iPhones approaching in August,
Apple Inc. stood to lose billions of dollars in profit. Chief
Executive Tim Cook reached out to one of his most important
contacts in Washington, Jared Kushner.
Mr. Kushner arranged a call between Mr. Cook and his
father-in-law, President Trump, people familiar with the call said,
giving the Apple chief a chance to explain how tariffs would
increase iPhone prices and impair Apple's ability to compete
against rivals such as Samsung Electronics Co.
Within days, the Trump administration scaled back its tariff
plan to exempt a swath of electronics products, including iPhones,
saying it wanted to protect consumers ahead of the holiday shopping
season. The call from Mr. Cook influenced the decision, a person
close to the administration said.
A day after that move, Apple issued a press release trumpeting
job growth, saying that since 2011 it had quadrupled the number of
jobs its business supports in the U.S. Later, Mr. Trump publicly
praised Mr. Cook's power of persuasion, saying the CEO had made a
compelling argument about tariffs.
The events encapsulated Mr. Cook's diplomacy in the Trump era.
To protect his company's interests, people close to the company and
administration said, the Apple CEO has cultivated a relationship
with the president and his family, an unlikely alliance given their
contrasting personalities and divergent views on many issues.
The rapport between Mr. Cook, a Hillary Clinton supporter in
2016 who fashioned Apple's outsourcing strategy, and Mr. Trump, a
Republican who campaigned against Apple's China-based
manufacturing, has served each man's interests in such areas as
trade and tax reform, even as they remain divided over immigration
and climate change.
The nascent impeachment inquiry is unlikely to have an immediate
effect on the relationship, according to people close to Apple. Mr.
Cook is expected to continue to engage on issues related to the
company's business while steering clear of politics and pushing
back on social issues.
Mr. Cook serves as an adviser to the administration's workforce
policy board, and the two have dined together the past two summers
at Mr. Trump's golf club in Bedminster, N.J. Mr. Trump refers to
the Apple CEO as a friend and lauds his business chops. He has
called Mr. Cook to wish him a Happy Thanksgiving, a person familiar
with the matter said.
"He's a great executive," Mr. Trump said recently. "Others go
out and hire very expensive consultants. Tim Cook calls Donald
Trump directly."
Mr. Trump has spent more of his working time than predecessors
with corporate leaders, said presidential historian Jeremi Suri, a
professor at the University of Texas at Austin. He said those
relationships tend to focus more on administration priorities such
as trade and tariffs than the broader economy, a focal point of
past administrations.
Mr. Cook is one of the few executives in a hyperpolarized
political era who has managed to both support and challenge the
president's agenda in a way that has kept him in Mr. Trump's good
graces while avoiding any public backlash from either employees or
customers.
Such engagement has proved risky for other chief executives.
Facing public pressure, Under Armour Inc.'s Kevin Plank, Tesla
Inc.'s Elon Musk and Uber Technologies Inc.'s Travis Kalanick
resigned from presidential advisory councils over disagreements
with the administration. A similar resignation by Merck & Co.
CEO Kenneth Frazier, who publicly criticized the president's
handling of violence in Charlottesville, Va., led Mr. Trump to
unleash a barrage of tweets castigating the drugmaker for high
prices.
"There are only a handful [of executives] who have been able to
thread the needle," said Jeffrey Sonnenfeld, a Yale University
management professor who has informally advised Mr. Trump over the
years before he became president. "This is a newfound capability
for Apple. Steve Jobs didn't have influence in Washington, and Tim
Cook has offered it." He added that Mr. Trump's volatility means
the relationship with Mr. Cook could change, but that was unlikely
in the near term.
Apple declined to make Mr. Cook available for an interview. The
White House said Mr. Trump declined to comment. (Dow Jones &
Co., publisher of The Wall Street Journal, has a commercial
agreement to supply news through Apple services.)
Mr. Cook's personal diplomacy stands out among tech giants.
Others have sharply increased their outlays on lobbying in recent
years but haven't forged close ties to the administration. Apple's
$18 million in lobbying since 2017 is half of what either
Amazon.com Inc. or Google's Alphabet Inc. have spent, according to
the Center for Responsive Politics.
Mr. Cook fostered close ties with Mr. Kushner and his wife,
Ivanka Trump, giving him a backchannel to the White House. He also
meets regularly with administration officials such as economic
adviser Larry Kudlow. Despite his personal preference for privacy,
he has attended publicly promoted dinners and meetings with Mr.
Trump, said people close to Apple and the administration.
Nearly 97% of Apple employee donations to candidates in the 2018
midterm elections went to Democrats, according to the Center for
Responsive Politics, citing public disclosures. Yet employees
haven't publicly criticized Mr. Cook for engaging with the
president. Mr. Cook has challenged the president on some social
issues. His personal lobbying benefited the company on the tariff
issue, and tax changes that led to employee bonuses.
At a March meeting, President Trump introduced Mr. Cook as "Tim
Apple" -- a mistake that ricocheted across social media. Trump
supporters laughed, while critics painted it as yet another
presidential gaffe. Mr. Cook responded by updating his name on
Twitter to use the Apple logo in place of his last name.
Presidential supporters read it as an inside joke between the two
leaders, while opponents interpreted it as a jab at the
president.
"There are a lot of folks in Silicon Valley who reek of
disdainfulness for politics," said Sen. Mark Warner (D., Va.), who
regularly meets with Mr. Cook. "They often presume they're much
smarter than anyone in policy...Tim doesn't have that approach. He
actually listens."
Mr. Cook grew up outside Mobile, Ala., the son of a shipyard
worker, and earned an engineering degree at Auburn University and
an M.B.A. from Duke. He is an operations wizard, skilled at
minimizing costs. In his previous role at Apple, he shifted
production from the U.S. to China, and helped build a business
there that accounts for one-fifth of Apple's revenue.
Mr. Trump was elected president after promising to rebuild
American manufacturing and place tariffs on Chinese goods. "We're
going to get Apple to build their damn computers in this country
instead of other countries," he said during a 2016 campaign
speech.
The month after his election, Mr. Trump summoned Mr. Cook to
meet in New York. Apple executives debated skipping the summit,
worried Mr. Trump would air grievances about manufacturing and
Apple's commitment to encrypted iPhones, according to a person
familiar with the company. But people who knew Mr. Trump encouraged
Mr. Cook to attend, this person said.
Mr. Trump was friendly and charming, said people familiar with
the meeting. He told Mr. Cook he looked forward to working together
and encouraged the CEO to contact Mr. Kushner with any issues.
Mr. Cook spoke about Apple's manufacturing practices, drawing a
contrast between smartphone production and automobile
manufacturing, according to these people. Most of the value in the
iPhone came from the design and engineering, he said, and the
Chinese workers who did the assembly received low wages, so how
could those jobs be good for U.S. workers?
He told Mr. Trump that a trade war with China would be a big
problem for major American companies such as Apple.
Messrs. Trump and Kushner appreciated Mr. Cook's approach, and
felt he was someone they could work with, a former senior
administration official said.
Mr. Cook came away from the meeting with a sense that Mr. Trump
listened and that they could work together, one of the people
familiar with the company said. When Mr. Cook was in Washington the
following month, he had dinner with Mr. Kushner and his wife at
Ristorante Tosca.
Their early rapport was tested a month later when Mr. Trump
signed an executive order suspending entry to the U.S. from several
Muslim-majority nations. The order disrupted airports and triggered
protests at Google, where thousands of people staged a walkout.
Mr. Cook, an immigration advocate, was surprised. Apple later
told the administration it disapproved of the measure. Mr. Cook
emailed Apple employees, saying he made clear to officials in
Washington that the company and nation wouldn't exist without
immigration.
His ties to the White House, though, remained intact. A few
months later, current and former administration officials said, Ms.
Trump called on Mr. Cook for help: Would he speak to her father
about his plan to exit from the Paris Climate Accord?
Mr. Cook's appeal to preserve the U.S. commitment to the climate
agreement didn't succeed, these people said, but it allowed him to
convey his feelings to the president directly before sending an
email to employees that criticized exiting the climate
agreement.
Mr. Cook has said he relies on a simple formula before weighing
in, asking himself: Does Apple have a right to talk about this? Do
we have standing? He speaks out about education, privacy, human
rights, immigration and the environment. "I don't think business
should only deal in commercial things," he said at a conference
last year.
Before challenging Mr. Trump's policies publicly, though, often
he or a member of Apple's public-affairs team alerts the White
House through Mr. Kushner or other senior White House officials,
former administration officials said.
At other times, Mr. Cook holds his tongue. When the president
told the Journal in July 2017 that Mr. Cook promised to build
"three big plants, beautiful plants" in the U.S., the company
declined to comment, pointing to past statements about its reliance
on U.S. suppliers for components.
While Mr. Cook had spoken with the president about manufacturing
around that time, the CEO hadn't discussed three plants in the
U.S., a person familiar with the company said. The CEO didn't
challenge Mr. Trump because "it would have been a tweet war," the
Journal reported last year, citing another person familiar with the
company.
"In being measured and thoughtful, he doesn't create crisis when
there doesn't need to be one, or antagonism when there doesn't need
to be any, " one of the former administration officials said of Mr.
Cook.
When Mr. Trump began working toward a planned tax cut in 2017,
Mr. Cook told the president that Apple would invest more in the
U.S. if it could bring its $250 billion in overseas cash back to
the U.S. at a lower tax rate, one of the former administration
officials said. Mr. Trump later cited Mr. Cook and Apple as he
promoted a tax overhaul, this person added.
In early 2018, less than a month after the tax bill was signed,
Apple announced it would contribute $350 billion to the U.S.
economy over five years -- a figure that included spending on parts
and services, capital spending and tax payments. Even though that
was consistent with Apple's previous spending levels in the U.S.,
Mr. Cook went on ABC News to tout the commitment, as well as
Apple's promise to develop a new Apple campus, which it later
awarded to Austin, Texas.
Mr. Trump praised Apple later that month during the State of the
Union address, saying its spending was an example of the benefits
of tax cuts.
Over time, the administration began to rely on Mr. Cook for
insight into trade and business issues around the world, including
in China, Brazil and Europe, former and current senior
administration officials said.
Trade remained a major sticking point. Mr. Cook told Mr. Trump
regularly that a trade war would harm U.S. companies. Mr. Trump
often told Mr. Cook he wanted Apple to add jobs in the U.S.
To ward off criticism of its overseas manufacturing, Apple
rebranded commitments to U.S. manufacturing as spending from an
"Advanced Manufacturing Fund" program, one of the people close to
the company said. Previously, similar spending commitments with
suppliers weren't publicized.
Early this year, Mr. Cook joined the American Workforce Policy
Advisory Board led by Ms. Trump. The group, which includes the CEOs
of Lockheed Martin Corp. and Siemens USA, aims to help U.S.
employers and the government better train workers.
Last year, when the White House announced duties on $200 billion
of Chinese-made goods, it exempted a group of products including
Apple's smartwatch and wireless earbuds. But the tariff threat
re-emerged in May when Mr. Trump threatened tariffs on another $300
billion in Chinese goods. The tariffs would have increased the
price of new iPhones, on average, by about $40, and reduced Apple's
per-share earnings by more than 20%, according to analysts.
Despite the tariff threat, Apple made plans to manufacture a new
version of its Mac Pro in China. The current version of the
computer was produced in Austin, Texas.
After the president said in August he planned to move forward
with the tariffs, Mr. Cook reached out to Mr. Kushner, who set up
the phone call with the president that helped persuade the Trump
administration to spare iPhones and other products from
tariffs.
The president later said Mr. Cook made the case that tariffs
would give Samsung an advantage over Apple because the South Korean
company wouldn't have to pay duties.
The plea clicked with Mr. Trump, according to former senior
administration officials. He wants to stop countries such as China
from competing unfairly against the U.S., and for American
multinationals to succeed world-wide.
Several weeks later, Apple reversed its plan for the Mac Pro,
announcing it would continue to make it in Austin, after the
administration granted exclusions on tariffs for some Chinese-made
components in the desktop computer.
"The reason I speak to Tim Cook: He's the one that calls me,"
Mr. Trump said in August.
--Alex Leary and Michael C. Bender contributed to this
article.
(END) Dow Jones Newswires
October 05, 2019 00:15 ET (04:15 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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