CNN —

President Donald Trump on Friday demanded Apple and other smartphone makers like Samsung make their phones in the United States or face a 25% tariff.

“I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” Trump posted Friday morning on Truth Social. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.”

Speaking to press in the Oval Office on Friday after signing executive orders, Trump said the tariff would apply to any phone maker selling devices in the US.

“It would be more. It would be also Samsung and anybody that makes that product,” Trump told reporters. “Otherwise it wouldn’t be fair.”

Trump last week during his Middle East trip said he was displeased with Cook, Apple’s CEO, over the company’s plan to manufacture iPhones set to be sold in the United States at newly built plants in India.

Over the past several years, Apple had been working to diversify its production capabilities. Some iPhone production had already moved to India, and Cook on Apple’s earnings call with investors earlier this month said he expected “the majority of iPhones sold in the US will have India as their country of origin.”

On that call, Cook said he expected Apple would face a tariff burden of up to $900 million this quarter. However, it could have been significantly worse: Apple and other US tech companies scored a big win last month when Trump exempted electronics from his massive tariffs on China.

Unlike Apple, Samsung doesn’t rely on China for smartphone production. The South Korea-based tech giant closed its last phone factory in China in 2019 after losing market share to domestic rivals, though it still has operations there. Sources within Samsung previously told CNN that the vast majority of its smartphone manufacturing takes place in South Korea, Vietnam, India and Brazil.

Despite lowering his tariff to at least 30% on most Chinese goods — down from 145% earlier this month — a 10% universal tariff remains on the majority of goods entering the United States. Roughly 90% of Apple’s iPhone production and assembly is based in China, according to Wedbush Securities’ estimates.

Trump met with Cook in Riyadh at the beginning of the president’s Middle East trip last week. In Qatar, he called out Cook for his plan to build US-bound iPhones in India.

“I had a little problem with Tim Cook,” Trump said last week in Qatar. “I said to him, ‘Tim, you’re my friend. I treated you very good. You’re coming in with $500 billion.’ But now I hear you’re building all over India. I don’t want you building in India.’”

Cook met with Trump once again at the White House on Tuesday, an administration official told CNN. The official did not divulge the subject matter of the meeting.

Treasury Secretary Scott Bessent said in an interview with Fox News on Friday morning that Trump is trying to “bring back precision manufacturing to the US.”

“I think that one of our greatest vulnerabilities are these, is this external production, especially in semiconductors, and a large part of Apple’s components are in semiconductors,” Bessent said. “So we would like to have Apple help us make the semiconductor supply chain more secure.”

Some of Apple’s chips are already made in the United States, thanks to its partnership with TSMC, which recently opened a chipmaking plant in Arizona. The company did not immediately respond to a request for comment.

‘Those jobs aren’t coming back’

The world’s most valuable publicly traded company is flush with cash and rakes in tremendous profit — more than any company in history. But Apple has long contended that it cannot manufacture iPhones in America.

Apple has invested billions of dollars training millions of skilled engineers abroad. China and India, with their massive populations, simply have more skilled engineers than the United States does. And it costs Apple significantly less to pay those workers.

Steve Jobs, Apple’s late CEO, famously brought up the issue during an October 2010 meeting with former President Barack Obama. He called America’s lackluster education system an obstacle for Apple, which needed 30,000 industrial engineers to support its on-site factory workers.

“You can’t find that many in America to hire,” Jobs told Obama, according to his biographer, Walter Isaacson. “If you could educate these engineers, we could move more manufacturing plants here.”

In a 2012 interview with tech journalists Kara Swisher and Walt Mossberg, Apple CEO Tim Cook said he agreed with Jobs’ assessment. When asked if the day would ever come when an Apple product is made in the United States, he said: “I want there to be … and you can bet that we’ll use the whole of our influence on this.”

The notion Apple can reshore iPhone production is a “fictional tale,” Dan Ives, global head of technology research at financial services firm Wedbush Securities, told CNN’s Erin Burnett last month.

US-made iPhones could cost more than three times their current price of around $1,000, he said, because it would be necessary to replicate the highly complex production ecosystem that currently exists in Asia.

“You build that (supply chain) in the US with a fab in West Virginia and New Jersey, they’ll be $3,500 iPhones,” he said, referring to fabrication plants, or high-tech manufacturing facilities where computer chips that power electronic devices are normally made.

And even then, it would cost Apple about $30 billion and three years to move just 10% of its supply chain to the US to begin with, Ives told Burnett.

Ives reiterated that stance in a statement following Trump’s Friday tariff threat, saying, “the concept of Apple producing iPhones in the US is a fairy tale that is not feasible.” He estimated moving all of Apple’s iPhone production to the United States would take five to 10 years.

An additional 25% tariff on Apple products could result in higher prices for US iPhone buyers. Rumors have already been swirling that Apple is considering raising prices when it releases its new lineup of iPhones in the fall — a move that could further irk Trump, although the company will likely avoid directly attributing the increases to tariffs.

Gene Munster, managing partner at Deepwater Asset Management, estimates it would be difficult for Apple not to raise iPhone prices if it faces tariffs of 30% or higher.

“Anything below 30, they will probably carry the vast majority of that increase,” he said. “But I think at some point they’re going to have to start to share it.”

While moving iPhone production to the United States may not be possible, Apple did announce a $500 billion investment to expand its US facilities earlier this year, in an apparent effort to appease Trump.

The company said the investment would create a new facility to produce servers — previously made outside the United States — in Houston to support Apple Intelligence, its new brand of artificial intelligence products. It will also expand data center capacity in several states, and plans to invest in corporate facilities and production of Apple TV+ shows in 20 states, among other efforts.

This story has been updated with additional details and context.

The NASA logo hangs in the Mission Operations Control Center at Wallops Flight Facility on Wallops Island, Virginia, U.S., October 26, 2022. REUTERS/Evelyn Hockstein/File Photo Purchase Licensing Rights , opens new tab

Summary

Companies Trump proposal would cut NASA’s current budget by 24%

Cuts would affect joint missions with Europe, Canada, Japan

‘Mars-focused programs’ would get $1 billion boost

WASHINGTON, May 2 (Reuters) – U.S. President Donald Trump’s budget proposal seeks to axe key parts of NASA’s moon program with a $6 billion cut for the space agency’s 2026 budget, but provides a boost to the Mars-focused agenda pushed by billionaire SpaceX CEO Elon Musk.

The outline of Trump’s proposed 2026 budget, released on Friday, would cancel NASA’s over-budget Space Launch System (SLS), a gigantic rocket built by Boeing and Northrop Grumman, and its Lockheed Martin-built Orion crew capsule after their third mission in 2027 under the agency’s Artemis program.

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Cutting 24% of NASA’s current $24.8 billion budget, the proposal threatens to cancel major science programs affecting thousands of researchers worldwide. It would upend active contracts defended for years in Washington by an array of established NASA contractors and overturn missions and programs in which U.S. allies play key roles, such as the European Space Agency, Canada and Japan.

Nearly all parts of NASA face deep cuts except for its human exploration portfolio, in which the administration proposed a $1 billion boost for “Mars-focused programs.” This portends a major revision to the Artemis effort that leans toward SpaceX CEO Musk’s vision to send humans to the Red Planet.

A White House budget summary called SLS and Orion “grossly expensive” that have far exceeded their budgets. Critics called the cuts, including a 47% cut to NASA’s science budget, “a historic step backward” for the country’s space efforts.

The Artemis program, spawned by Trump’s first administration, aims to return humans to the moon before Chinese astronauts get there in 2030. Seeing the lunar surface as a testbed for later Mars missions, Artemis has grown into a multibillion-dollar effort on the frontline of an emerging global space race, involving dozens of private companies and countries.

Trump’s new administration has fixated on getting humans to Mars, the long-sought destination for Musk, the president’s outgoing adviser who spent $250 million on Trump’s campaign to return to the White House.

SpaceX’s Starship rocket , a multi-purpose behemoth at the center of Musk’s Mars vision, is contracted to land NASA astronauts on the moon in 2027 as one of several vehicles involved in the program, such as the SLS and Orion duo that work together to get astronauts off Earth.

“The Budget phases out the grossly expensive and delayed Space Launch System (SLS) rocket and Orion capsule after three flights,” the budget summary said, noting SLS’s per-launch pricetag of $4 billion. The rocket’s development cost of roughly $23 billion since 2010 is “140 percent over budget,” it added.

“The Budget funds a program to replace SLS and Orion flights to the Moon with more cost-effective commercial systems that would support more ambitious subsequent lunar missions,” the summary added.

“This proposed cut would represent a historic step backward for American leadership in space science, exploration, and innovation,” the Planetary Society, a space policy organization founded by famed scientist Bill Nye, said, referring to Trump’s overall budget reduction.

The budget plan mentioned a parallel moon and Mars mission agenda, appearing to balance intense pressure from Congress and the space industry to keep the moon program with calls from Musk’s circle to prioritize a Mars program.

Trump’s nominee for NASA explained similar ideas during his confirmation hearing last month. Jared Isaacman, a billionaire private astronaut and SpaceX customer, was expected to receive a Senate vote later this month to become NASA administrator.

MULTI BILLION-DOLLAR CONTRACTS AT STAKE

Lockheed Martin is contracted to build Orion crew capsules to Artemis 8, representing at least $4 billion that face potential termination.

The company is currently building the Orion spacecraft for Artemis 4, Kirk Shireman, Lockheed’s vice president of human space exploration, told Reuters on Thursday before the budget plan announcement.

“We are working to even accelerate our work production for Artemis 3, 4, 5 and beyond, and NASA has been working with us and encouraging us to continue doing that,” Shireman said.

The budget would cancel the Gateway station, a research station and transfer point between spacecraft launching from Earth and landers descending to the moon’s surface. Gateway was designed to orbit near the moon and due for initial deployment in Artemis 4.

Northrop Grumman (NOC.N) , opens new tab has a $935 million NASA contract to provide a Gateway module that was delivered last month by subcontractor Thales Alenia Space. Northrop has taken roughly $100 million in charges on the program, securities filings show.

It was unclear what lunar missions Trump’s NASA is planning after Artemis 3, though they likely would favor rockets built by SpaceX and Jeff Bezos’ Blue Origin, which is also building a moon lander due to be used on later Artemis missions.

Last year, NASA and Japan signed an agreement to include Japanese astronauts on a future Artemis moon mission, a significant step in the U.S.-Japan alliance that would put the first Asian astronaut on another celestial body.

NASA said Gateway components already built can be repurposed for other missions and that “international partners will be invited to join these renewed efforts.”

Reporting by Joey Roulette; Editing by William Maclean and David Gregorio

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What the Trump-Musk breakup may mean for SpaceX and Tesla

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“If I cared about subsidies,” Elon Musk said in 2015, “I would have entered the oil and gas industry.”

Yet the history of Musk’s business empire tells another story.

Musk’s companies have long been fueled by taxpayer money, whether in the form of massive government contracts, low-interest loans, tax breaks and other support that helped make Musk one of the world’s richest people.

Over the past two decades, companies run by Musk have received tens of billions of dollars in federal backing.

One tally, by The Washington Post, found that at least $38 billion in government support has been funneled to Musk’s companies, an estimate that likely undercounts the breadth of support since some defense and intelligence contracts are not publicly available.

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In turn, the U.S. government has become reliant on Musk, from space travel, to national security to the future of green transportation.

So when President Trump on Thursday threatened to end Musk’s government subsidies and contracts in a spiraling feud between the former political allies, it was greeted with some skepticism.

Musk has deep ties to the U.S. space program and intelligence community

Musk’s companies have become inextricably tied to the federal government, particularly SpaceX’s crucial role in the U.S. space program.

The company’s rockets now provide the only way for U.S. astronauts to get to and from the International Space Station.

“While their political partnership appears to be at an end, it is difficult to imagine the government canceling SpaceX contracts anytime soon,” said Dan Grazier, senior fellow and program director at the Stimson Center, a think tank focused on national security.

“It will be some time before any of the company’s competitors will be able to take up the slack, so it looks like the president and the tech mogul will have to find a way to get along,” he said.

It’s unclear if Musk was trolling or being serious, but he responded to Trump’s threats by saying SpaceX will begin decommissioning its Dragon spacecraft, which has been used for years to ferry crews and cargo to the space station.

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In fact, there are now astronauts at the station. They were taken there by a SpaceX capsule.

Walking away from the federal government would strand those crew members and complicate the Trump administration’s goal of landing astronauts on the moon in the coming years.

Later on Thursday, Musk appeared to backtrack, writing on X: “OK, we won’t decommission Dragon.”

SpaceX is also building hundreds of spy satellites for the Pentagon, Reuters reported in March, work that, if abandoned, could have national security implications and prompt a backlash from the intelligence community.

In addition, SpaceX’s Starlink satellite network is a player in a multibillion-dollar federal effort to expand internet access to underserved parts of the country.

Ukraine has also relied heavily on Starlink services since Russia launched a full-scale invasion of the country in 2022, leading top Pentagon officials to coordinate directly with Musk, The New Yorker has reported.

Federal support for Tesla and electric vehicle infrastructure in doubt

Tesla, the biggest electric vehicle company in the U.S. (which also controls the country’s largest charging network), has been a major beneficiary of federal support.

That’s likely to change under the massive congressional reconciliation bill being championed by Trump.

The version of the bill passed by the House would chop consumer tax credits for buying electric vehicles and slash federal funding for charging stations.

While auto industry experts view those cuts as hurting legacy automakers more than Tesla, Trump accused Musk of not supporting the bill because it gutted subsidies for electric vehicles.

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Musk has previously opposed the EV tax credits, viewing them as mostly benefiting his competitors, but he changed his tune as Tesla’s profits and sales plummeted globally since Musk began overseeing mass layoffs and other shake-ups to the federal government through the cost-cutting unit, the Department of Government Efficiency.

The end of federal programs aimed at growing the EV sector would not damage Tesla as severely as other problems the automaker is confronting, said John Helveston, a professor at George Washington University who studies the electric vehicle industry.

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“Musk hasn’t done Tesla any favors by taking extremely unpopular actions in his time at DOGE, and globally the business is struggling from other decisions, like focusing on the Cybertruck instead of releasing more new practical models that consumers actually want,” he said. “In the European Union, sales are down heavily from the political damage, and sales in China are down from intense competition of very competitive Chinese EVs.”

During the Biden administration, Congress devoted billions of dollars to expand electric vehicle charging stations nationwide. A major pillar of this plan was having Tesla make its chargers compatible with other vehicles, something Tesla agreed to in exchange for a slice of the federal funds. That plan has been halted by the Trump administration, even before Congress tried to pass the Trump-backed tax policy bill that would roll back support for EVs even more.

Jeffrey Sonnenfeld, an associate dean at the Yale School of Management, said further pain for Tesla could eventually plunge Musk’s riches.

“Tesla is hugely reliant on federal largesse for the build-out of EV charging infrastructure, not to mention federal regulatory approval for his continued autonomous driving and robotics experiments,” Sonnenfeld said.

“His wealth is highly precarious,” he said, noting that most of Musk’s fortune is tied to his stake in Tesla. “The reality is that Musk’s position is far weaker than many realize.”

Subsidies or not, Musk will “continue to thrive”

The acrimonious Trump-Musk implosion on Thursday came only months after Trump transformed the driveway of the White House’s South Lawn into a Tesla showroom, and after the White House tapped Starlink to help expand internet across the White House campus.

Both were performative gestures that crystalized the billionaire’s cozy relationship with the president, who was willing to shill for Musk after he dished out more than a quarter-billion dollars to support Trump’s run for president.

So will the Trump-Musk breakup cut the opposite way and inflict pain on Musk’s companies?

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Paul Levinson, a professor at Fordham University, said perhaps it will lead to more short-term stock market drops for Tesla and a hit to his wealth. But even if some of the federal money that flows to Musk’s business empire disappears, it will not likely hamper the billionaire in the long run, he said.

“Musk has ample resources to sustain those losses, reshuffle and rebuild his companies and holdings, and come out ahead and on top,” Levinson said. “Bottom line: if all the Trump government does in its feud with Musk is attack his financial interests, Musk is very likely to not only survive but continue to thrive.”

CNN —

The Trump administration’s tariffs on imported cars and auto parts will cost General Motors between $4 billion and $5 billion this year. But in an interview on CNN, CEO Mary Barra said the company doesn’t necessarily expect to pass those higher costs onto consumers in the form of elevated prices.

“We believe …pricing is going to stay at about the same level as it is,” she told CNN’s Erin Burnett Thursday, although she added, “Pricing changes in our industry at least monthly, and sometimes more frequently. We’re going to respond to the market.”

The company does expect the higher tariff costs to eat into its earnings as it slashed its profit guidance for the year. The estimated tariff cost, and the lower profit target, were revealed in a letter to shareholders from Barra released early Thursday. The letter and guidance were delayed from their planned release on Tuesday, when the company reported lower first-quarter earnings and awaited tariff changes from the Trump administration.

The lower earnings guidance resulted in GM halting plans to spend additional billions in repurchasing its stock, a move it announced Tuesday. But it’s not just investors who could be hurt by lower profits. The roughly 45,000 members of the United Auto Workers union also get profit sharing payments from the company annually. They received record payments of up to $14,500 for 2024.

GM is the first major company to estimate, in dollars, how much President Donald Trump’s sweeping tariffs will cost it. Many others have walked back earnings forecasts because of the ensuing economic uncertainty.

Trump’s tariffs have unnerved not only global companies, but investors, nations and everyday Americans alike. Major stock indexes closed out a volatile April, and on Wednesday new data showed that the US gross domestic product unexpectedly shrank in the first three months of the year as recession fears abound.

The auto industry has been a particularly central target for Trump’s tariff efforts, with levies already in place on most imported automobiles and tariffs coming this Saturday on many of the imported parts used to build cars at American factories.

Record profits of 2024 will take a hit

While GM is not the dominant global auto player it once was, it is still the largest American automaker, with US sales of 2.7 million cars and trucks last year.

It also has been very profitable, posting net income of nearly $12 billion in 2024, excluding special items. Barra’s letter says that 1 million US workers depend on GM, either as employees, suppliers or dealers, with 50 US manufacturing plants and parts facilities in 19 states.

But Barra’s letter says the company now expects adjusted earnings before interest and taxes of between $10 billion and $12.5 billion this year, sharply lower than the record $14.9 billion it earned on that basis last year, and less than the guidance it gave in January before Trump announced his levies.

GM faces tariffs on several fronts. It builds cars and trucks in Mexico and Canada, producing nearly 1 million vehicles in those two countries last year, according to S&P Global Mobility. Most of those vehicles end up being exported to US dealerships.

In addition, GM imported more than 400,000 vehicles from South Korea last year. All imported cars now face a 25% tariff, although the Canadian and Mexican tariffs can be reduced by credits for American- and Canadian-made parts.

In fact, all the 1.7 million cars and trucks GM built in the US last year depended on imported parts to some degree. According to an estimate from American University Kogod School of Business, GM’s US-built vehicles have American parts making up an average of 54% of their content.

Starting this Saturday, GM could face 25% tariffs on many of those imported components. While the Trump administration announced some partial offsets, GM could still face substantial costs.

Nevertheless, Barra thanked the Trump administration for the break on auto parts tariffs and raised hopes for further changes.

“We look forward to maintaining our strong dialogue with the administration on trade and other policies as they continue to evolve,” she said. “As you know, there are ongoing discussions with key trade partners that may also have an impact.”

Car prices constrained by weaker demand

Car prices are not directly set by automaker. Instead, prices are the result of millions of individual negotiations that take place between dealers, who are independently-owned businesses that buy cars wholesale from manufacturers, and car buyers.

If the 25% tariffs on imported cars cause a drop in the supply of vehicles being shipped to dealers, that can put upward pressure on pricing. The economic law of supply and demand suggests that less supply and unchanged demand will push prices higher.

That’s what happened in 2021, when a shortage of computer chips during the Covid-19 pandemic caused a sharp cut in production across the auto industry. The average new car price jumped 17% between January and December of 2021, according to Edmunds’ data. The shortage, coupled with higher prices, sent many typical new car buyers into the used car market, which rose even faster at 32%.

But car buyers in 2021 were enjoying low interest rates and federal stimulus checks. Neither is available to spur demand today. And current surveys show very low consumer confidence fed by fears of a possible recession.

However, many car buyers rushed to buy cars in March and early April on fears that prices would rise due to tariffs, pulling forward some sales that might have taken place later in the year. So softer demand could keep prices in check.