Capex
On February 24th, Apple announced that, over the next four years, the company will invest $500 billion into U.S. advanced manufacturing and high-tech initiatives such as artificial intelligence and silicon engineering. Additionally, the company expects to hire 20,000 people over this time frame. These investments will make important contributions to the economy, but they are not, as President Trump asserts, a victory for his tariff proposals.
It goes without saying that Apple is a major contributor to the U.S. economy. According to the company, “Apple supports more than 2.9 million jobs across the country through direct employment, work with U.S.-based suppliers and manufacturers, and developer jobs in the thriving iOS app economy.”
These investments are not new. Apple has been dedicating hundreds of billions of dollars in investments to the U.S. economy for many years. Back in 2021, Apple announced,
an acceleration of its US investments, with plans to make new contributions of more than $430 billion and add 20,000 new jobs across the country over the next five years. Over the past three years, Apple’s contributions in the US have significantly outpaced the company’s original five-year goal of $350 billion set in 2018.
Seen in this light, the $500 billion investment announced in February 2025 is simply a continuation of Apple’s long-standing commitment to the U.S. economy regardless of the Administration. The company’s bullish view on the U.S. economy predates the president’s long list of proposed tariffs.
These ill-advised proposals include the announced 25 percent tariff on Columbia (rescinded), 25 percent tariffs on Canada and Mexico (delayed),10 percent tariffs on China (implemented), a 25 percent tariff on steel and aluminum imports (announced), and a reciprocal tariff on all our trading partners (announced). If all these proposals were implemented, the policy would undermine the foundations encouraging companies like Apple to invest so much money in the U.S. economy.
As I document in my latest Pacific Research Institute analysis, tariffs are taxes on U.S. households and businesses. Tariffs force households to pay higher prices for the imported products that they regularly consume, which is around 20% of total domestic consumption. Due to these tariffs, families will spend more money but will consume less; in other words, the tariffs will make U.S. families worse off. The reduced consumption bodes ill for U.S. economic growth.
While the tariff discussion often focuses on consumer goods, many imports are intermediate goods that domestic businesses use, which makes domestically produced goods better and more affordable. Consequently, costs will increase for domestic manufacturers should the Administration’s tariffs plan be implemented.
Compounding this problem, today’s manufacturing process often sends products across international borders multiple times. These goods, which are produced by some of the largest U.S. manufacturers, would be subject to multiple rounds of tariffs under the Administration’s plan. This compounding would significantly increase the prices of many domestically produced goods.
The adverse impacts from these higher costs will harm both households and businesses. Households will suffer because the prices on domestically produced goods will also increase, worsening the affordability problems created by the now more expensive imported goods.
Even though families are spending more, U.S. businesses will earn lower profits from these sales. These lower profits will have an immediate adverse impact on the economy. With reduced sales and profitability, the numbers of unemployed workers will increase and the amount of investment into the U.S. economy will decrease.
Ultimately, the tariffs will reduce the economy’s vibrancy. Canadian Prime Minister Justin Trudeau summarized the negative impacts that Americans should expect in a speech after the Trump administration announced its Canada-Mexico-China tariff plans:
Tariffs against Canada will put your jobs at risk, potentially shutting down American auto assembly plants and other manufacturing facilities.
They will raise costs for you, including food at the grocery stores and gas at the pump.
They will impede your access to an affordable supply of vital goods crucial for U.S. security, such as nickel, potash, uranium, steel and aluminum.
Less economic investment has adverse implications for the long run. Capital expenditures – such as those announced by Apple – drive the innovations that increase people’s income, promote employment growth, and broadly raise our living standards. By discouraging investment, the tariffs are dimming the foundations for a more prosperous future.
Tariffs are anti-growth policies that reduce income and job growth, increase the cost of living, and lower overall economic efficiencies.
Instead of implementing anti-growth policies, the Trump Administration should implement a consistent pro-growth economic platform. These policies would prioritize reining in out-of-control government spending (including entitlement reform), establishing a broad-based flat tax, reforming overly burdensome regulations, and promoting global free trade. Such an economic platform has demonstrated its ability to promote broad-based prosperity by meaningfully improving the incentives to work, save, and invest.
