How Tim Cook Won Donald Trump’s Ear

President Trump speaks with Tim Cook at an American Workforce Policy Advisory Board meeting in March. Photo: Al Drago/Bloomberg News

With the threat of tariffs on iPhones approaching in August, Apple Inc. AAPL 2.80% 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 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.

After the president mistakenly called him Tim Apple, Mr. Cook updated his name on Twitter to use the Apple logo in place of his last name. Photo: stringer/Agence France-Presse/Getty Images

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.

Share Your Thoughts

What’s the best way for a CEO to engage with this White House? Join the conversation below.

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.

Apple CEO Tim Cook, center, speaks with President Trump while White House adviser Jared Kushner looks on during an American Technology Council meeting in 2017. Photo: Alex Brandon/Associated Press

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. Trump announces in 2017 that the U.S. will withdraw from the Paris Climate Accord. Photo: kevin lamarque/Reuters

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.

Mr. Cook with the new Mac Pro, which Apple decided to continue making in Austin, Texas. Photo: mason trinca/Reuters

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.

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8


Comments are closed.