Trump Tells Apple To Make Products In the US To Avoid China Tariffs (thehill.com)

hackingbear writes: President Trump acknowledged in a tweet that "Apple prices may increase because of the massive Tariffs we may be imposing on China," but suggested the issue was not with the tariffs themselves. "There is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now," Trump wrote. The U.S. is threatening to impose 25% tariffs on all $500 billion worth of Chinese imports over issues such as intellectual property theft.

While Apple et al are still making their products in China, Trump didn't offer Apple a place to find the millions of laborers needed to make their products, given that the official unemployment rate is at a historic low of 3.9%. Manufacturers also need to compete in the labor market with garbage companies who need to find American laborers willing to recycle their own trash -- a job once imposed upon China as a condition to enter the World Trade Organization and enjoy advantageous tariff rates. China is gracefully giving back those jobs as the U.S. is complaining of unfair trades.

Comments

Or, they could buy them in Canada...

[dlingman]

Isn't there an 800$ tax/duty etc free limit on importing items from abroad? If they buy their iPhones from Canada, and the cost is under $800 US...

Rock and hard place

[stikves]

Some electronics require rare earth materials to manufacture, which currently are sources from China or other countries. Those have export restrictions from China: https://en.wikipedia.org/wiki/... , and they ask the products to be manufactured there.

US now asks products to be manufactured here, and will add additional taxes (tariffs) if this request is not complied with.

So Apple and other manufacturers are split between two bad choices. They will have to weigh which one is less worse, and go in that direction. In all cases it will most likely be the consumers that suffer.

Re:Rock and hard place

[Registered Coward v2]

Right. Just imagine what an iPhone would cost now if it was built with US labor wages and protections in factories with US (especially pre-Trump) environmental controls and protections.

One of the last, if not last, assemblers of TVs is closing because the tariffs on components has made it impossible to compete. Trump, as usual, has come up with a tweet worthy solution that is unworkable. A more likely solution wold be to ramp up production outside of China in non-tariff locations. Much of the actual value in the iPhone is made elsewhere and shipped to China, only final assembly is primarily done there. Until Apple manages to fully automate that it is still labor intensive which makes US manufacture expensive unless you do a WalMart; something I doubt Apple would do. One thing for certain, no matter what pple does Trump will declare victory and claim he has won biggly.

Re: Rock and hard place

[BeanThere]

You have a point, but we could partly solve this by dropping the patent system (the average smartphone has over 250,000 patents covering it), then instead of obscene profits all going to a tiny handful of mega-wealthy shareholders, we could have products made in America that are also still affordable, as getting rid of the patents would cause a huge drop in the price of the products, which would (A) offset the increase that goes to paying a living wage to American workers and (B) help keep the products comparably affordable to said middle-class workers.

Re:Rock and hard place

[Gavagai80]

Those rare earth materials are present in the USA. Trump is hard at work ripping up environmental regulations so that we can enjoy strip mining throughout America.

Re:Rock and hard place

[Njovich]

Wow, are you a time traveler from 2010? Because that's when it became clear that China couldn't leverage the rare earth monopoly. Rare earths are everywhere, and the China/Japan rare earth embargo in 2010 was immediately overcome by Japan, it did zero damage.
The two dollars worth of metals in a phone could double price and it wouldn't matter, not that they'd actually double as there are plenty of other suppliers. Now the actual chip & electronics manufacturing capabilities of China, combined with reasonable quality affordable staff, that's a lot harder to replace.

Re:Rock and hard place

[pots]

Apple just got a ton of money from that giant tax cut. We're going to be paying for Apple's tax cut for decades, they can afford to lose out a little on their already very comfortable profit margins.

Re:Rock and hard place

[Goldsmith]

Mines in California used to provide most of the world's rare earth metals. The ore is still there, the mine still works, and we have tons of the stuff. The mines have struggled with bankruptcy after being undercut by mines from China in the early 2000s.

Fundamentally, the problem is the subsidy of rare earth mining and use of environmentally irresponsible processing in China artificially lowering the price of the metals in China. The export ban was an effort to focus the advantage of those policies on down-stream manufacturing in China after crippling their biggest competition (mines in the US). In the article you linked, there's reference to recent US industry proposals that we do the exact same thing here, nationalizing and re-opening the California rare earth mines.

Re:Rock and hard place

[fermion]

With consumer electronics, and increasing cars, there is no made in one country. Parts are sourced from all over the world. Tariffs are going to add to costs no matter where it is made because a lot of stuff is going to have to be imported no matter what.

One relevant criticism of the tariffs is the actual cost of work done of assembling the Apple product is a tiny faction of it's value. For a $2000 computer it might be less than $100.So taxing the full value can be considered unfair, as the conservatives always like to say.

What I find interesting is that lots of industries do not face such complications. For instance apparel can be sourced more easily that cars or electronics, and assembled in the USA. However, as simple as it is to make clothes in the USA, Trump and his family still chooses to make the clothes in Mexico and China.

So, as Trump chooses not manufacture in the US, and in fact regularly imports workers from other countries instead of hiring local workers, we can only assume that he knows, as president, something we do not. Like maybe US workers are inferior.

Re:Rock and hard place

[Koby77]

The TV assembler that you are referring to was called Element Electronics, in South Carolina. They were kind of a fraud.

https://www.postandcourier.com...

But the trade group heard about Element, and it bought a couple of sets. When they opened their boxes — draped with pictures of the American flag — they were startled to see “made in China” stamped on the back.

So in 2014, they filed a complaint with the Federal Trade Commission, accusing Element of misleading marketing. They described the company’s practices as “red, white and blue-washing,” since a product can’t be called “made in America” if its parts are all foreign.

Basically, they had the entire TV manufactured and assembled, then shipped to their South Carolina plant already in the box in which it would be sold. American workers opened the box, tested the TV to ensure that it worked, and packaged it back up. For this, they tried to imply on the packaging that it was made in the USA. And they also took government subsidies.

Re:Rock and hard place

[kenh]

Now the actual chip & electronics manufacturing capabilities of China, combined with reasonable quality affordable staff, that's a lot harder to replace.

Any manufacturing capability China has can be easily replicated in America, esp. by a company like Apple with their seemingly infinite financial resources, what can't be replicated here are low wages, lax environmental and worker protections.

Re:Rock and hard place

[Koby77]

I'm skeptical that there is a labor shortage. Simple supply and demand rules of economics tells us that if there is a labor shortage, then the price of labor should increase. Small increases are normal due to inflation, and I'm glad if there are a few companies forced to shell out a few more bucks to its workers, but so far I haven't seen any huge amounts that would indicate a "labor shortage".

Re:Rock and hard place

[Anonymous Coward]

So it is OK for the Chinese to strip mine for rare earth metals, and then build the Iphones with slave labor and then ship those Iphones overseas on Nigerian flagged vessels staffed with cheap labor from the Philippines to be consumed by snooty white liberals who hate racism, but If Americans mine for rare earth metals on American soil, and then build those Iphones in America using American labor, and then ship those phones on trucks driven by Americans to be sold to Americans who can afford to buy them because they make stuff, then that is racist and damaging the environment.

Got it.

Re:Rock and hard place

[molarmass192]

Except Trump knows cell phones, nobody knows cell phones like him, let me tell you, you know, he has a cell phone. Has had one right from the start of phones. He knows what it takes to build one, and he's not buying it. We can create good, no great, jobs, let me tell you, for American people. It's people who make a difference, little people, like the people who build things. These are going to be the best, and Trump knows best better than anyone, cell phones the world has ever seen, and American's are going to build them, and export them to China, and those tiny Canadians. We're going to be the hugest cell phoning creating country the world has ever seen, and we're going to have it now. It's simple, mark his words, we ... will ... build ... them, and it's going to be great, and the phones are going to be great. The best the world has ever seen. He knows cell phones, not like that crooked Hillary, has anybody see those mail servers, but we're going to build those cell phones. The fake news will tell you cell phones can't be done, but Trump knows for a fact, he's seen it, that they are built here, and they're great, let me tell you.

This is kind of hilarious

[rsilvergun]

On paper we're at full unemployment. But funny enough there's a ton of resentment around not having jobs in America. Of course, everyone knows the unemployment stats are nonsense. But we act like they're not.

This leads to some crazy political theater. For one thing we've got economists trying to come up with excuses about why wages aren't climbing despite "full" employment. And now we've got Trump needing to explain to businesses where they'll get workers needed to run factories when on paper those workers already have jobs. I mean, I suppose Trump could argue that he'll do mass immigration. I'm sure that'll go over swell at his monthly rallies.

Re:This is kind of hilarious

[alvinrod]

Unemployment numbers are meaningless if they fail to consider the labor participation rate (which itself isn't the full picture). There are still a lot of people without jobs that have essentially given up on finding one. What we should be looking at is the number of hours of labor that are being worked. It doesn't matter if you've got two jobs on paper if they're both being filled by the same person because they can't get a 40 hour position any longer.

Tariffs are beyond idiotic as a solution to our economic issues and even if Trump does somehow manage to enact them, they're not going to survive beyond his presidency. We should be going in the opposite direction and removing all tariffs. If China or some other government wants to subsidize a local industry, let's import the hell out of those products. I'd be over the moon to get some other country's tax payers to foot the bill for the goods I purchase.

Re: This is kind of hilarious

[Gavagai80]

the labor force participation rate crashed in the recession and hasn't even recovered to it's carter-era level since then

Indeed, the baby boomers who took early retirement in 2008 have not flocked back to the workplace. Many of them are in their 70s. To get them participating in the workplace again you're going to need to completely gut social security and medicare. I know, they're working on that.

Or assemble them anywhere else but China

[Anonymous Coward]

Why United States?

Re:History

[cheesybagel]

Video 2000 was kinda wonky with it's reversible tapes which could store 8h in SP. The other fun thing about it was that the write protect tab could be switched on/off instead of just broken off like in VHS. Of course that probably made it hideously expensive to manufacture.

Find millions of laborers?

[Anonymous Coward]

I doubt that they need that many. In the U.S., a million Chinese laborers become 999,000 robots and 1,000 robot technicians.

Re:History

[AmiMoJo]

The main innovation was a crystal discipled tracking system that made the picture more stable, especially when paused or in fast forward.

No, no it isn't 3.9%

[drinkypoo]

given that the official unemployment rate is at a historic low of 3.9%

No, no it isn't. The current U6 unemployment rate as of August 2018 is 7.40, and even that fails to count many people. Anyone who reports the U2 unemployment rate is repeating a blatant and willful lie, which makes them at best an accessory to that lie. Do your research.

Re:No, no it isn't 3.9%

[l0n3s0m3phr34k]

There are also some other "unofficial" rates, like this one that pegs the "true unemployment around 21.2%. They add in "long-term discouraged workers" that were removed by BLI in 1994. My guess is this 21.2% is in large part the Trump die-hard base members; people who have been unemployed for so long the Feds don't even count them as real people anymore. That's 53M over-18 people.

Re:No, no it isn't 3.9%

[kenh]

My guess is this 21.2% is in large part the Trump die-hard base members; people who have been unemployed for so long the Feds don't even count them as real people anymore. That's 53M over-18 people.

You really think the majority of Trump's base are long-term unemployed adults? Let's think about that - you think millions and millions of long-term unemployed adults with no means other than government handouts, are die-hard trump supporters cheering him on to wipe out the very programs they personally rely on to survive? Conventional wisdom is that those without other means of support tend to fall on the democratic end of the political spectrum.

Re:No, no it isn't 3.9%

[psycho12345]

Unfortunately, yes, because those long term unemployed adults are called retirees, who dropped out of the workforce, either voluntarily or forcibly during the recession. They do depend on Social Security and Medicare, mainly the latter, because many do have either pensions, or good retirement funds, but drug costs and medical costs will obliterate anyone's retirement fund in a heartbeat. And yes, they are cheering him on to destroy those 2 programs. Hence the unironic quote "Keep the government out of my Medicare". And yes many many boomers who are retired are hard core Trump supporters.

Re:No, no it isn't 3.9%

[Paul Carver]

Unfortunately, yes, because those long term unemployed adults are called retirees

Hold on a minute. So Trump is lying about unemployment because he quoted a rate that doesn't include RETIREES?

Your comments about drug and medical costs are irrelevant. I'd love to see major changes in the US Healthcare system, but anyone who calls a number "unemployment" when it includes retirees is full of shit. If somebody retired and then ran out of money and started looking for work then they're unemployed, but you can't just say that everyone who is not working is unemployed. At least not if you want to keep the word "unemployed" as a bad thing.

Unemployment means #1 you want to work and #2 you're able to work. If you don't meet both those criteria then you're not unemployed regardless of whether you don't have a job.

And if the only "work" you're willing to do is work that no one is willing to pay you for then you don't qualify as wanting to work. I do things that require skill and effort but that no one would be willing to pay me to do but I also do things a company IS willing to pay me for. If I CHOOSE to only do the former and not the later then I should NOT BE counted as unemployed.

not happening

[supernova87a]

Sorry Trump, "Those jobs aren't coming back": https://www.nytimes.com/2012/0...

Even if the factories could be built here for a reasonable cost, even if the ecosystem of manufacturing suppliers could be recreated here, even if there were enough people looking for work, Americans would not want to take jobs working at such factories even at average factory wages.

Try to bring those jobs back here and welcome to $2000 iphones.

He said it, now it will Happen!

[Herkum01]

Finally, Trump told Apple what they needed to do. That was the problem with Apple, their management was totally clueless and had no idea what to do. They probably did not even have a meeting on the subject.

Now that Trump has finally spoken up and now they know what to do!

</sarcasm>

Sure, soon as Trump starts using American workers

[JoeyRox]

Seems he wants everyone else to pay more for domestic labor than he does. Most people feel the same way - in theory they want to support American workers, in pratice they don't want to pay for it either. Can't have it both ways.

https://www.newsweek.com/trump-hire-40-foreign-workers-mar-lago-1011011

If I were China

[duke_cheetah2003]

I'd really stick it to the US. Just shut down all exports to the US, pending trade talks. We would really feel that.

Trump is playing a very dangerous game with the dragon.

Re: If I were China

[phantomfive]

Someone pointed out that in an import/export imbalance relationship, the country that does the exporting feels the pain more quickly and deeply. Presumably, if China blocked all exports, manufactured goods would become more expensive in the US or hard to find. However, on the flip side many companies in China would have severe cash flow and revenue problems and go bankrupt, leading to massive unemployment, etc. Bad for one side, worse for the other.

Re:History

[kenh]

You literally have no idea what a tariffs are, do you? If you understood tariffs you couldn't have written this sentence:

Philips got the EEC (precursor to the EU) to put massive tariffs on Japanese machines to make them cost the same as Phipps' ones, but all that did was increase profit margins for Japanese companies and relieve price pressure on their manufacturing.

An EEC/EU tariff is a tax the EEC/EU collects as certain goods cross the border, the funds collected do not go back to the manufacturer, For example, a US tariff on iPhones manufactured in China collects an amount of money equal to 25% of the cost of the item and puts it in the federal government's coffers. The 25% tariff does not go back to China, Foxconn, or Apple.

The purpose of a tariff is to increase the price foreign goods allowing domestic producers to better compete on price, agree with it/disagree with the intention, your statement belied a complete lack of understanding of how tariffs work.

No one is moving jobs to US because of Trump

[jader3rd]

Pretty much everything that Trump has done, without approval from Congress, is going to get undone once he's out. So every company is just going to keep things in place, because it would be suicidal to invest in a move, only to have the reason for doing so undone before the move is finished.

Re:History

[kenh]

There's another problem with moving manufacturing to the US.

There's also the reality that other countries impose their own excessive, punitive tariffs on manufactured goods from the US.

Tariffs aren't uniquely American.

Obama already tried

[sdinfoserv]

Obama sitting next to Steve Jobs at a meeting asked "when are the jobs coming back", referring to the million Foxconn workers. Jobs responded, "never, that ship sailed". China has no labor laws. Just prior to the release of the phone 4, a flaw was found the required every single phone unboxed, fixed and reboxed . To make the marketing date all "employees" (slaves?) were forced to work round the clock to fix every single device so Apple could make the marking date. Also, Foxconn has workers as young as 14 chained to desks, workers live in "barracks", and conditions are so grueling, Foxconn installed nets around it's buildings to catch suicide jumpers. Next time you love your little icrap gadget, think about kids chained to their desks so you can blissfully listing with a your ibuds connected. No way any US based company could get away this.

Re: Build in USA with robots

[Herkum01]

I used to do Perl programming, I had to move from Pittsburgh to Tucson, AZ because there were no Perl positions in Pittsburgh and had to move half-way across the country because they could find no one locally for the position. If you are Shenzhen, there are thousand chip programmers because there are literally a thousand companies with those sorts of jobs, of course there is no problem with finding someone there!

I can imagine most people would not know what a "pick and place machine" is. Why would people apply for a job just because a company is offering a salary? Most companies don't respond to most job applications and why waste time for applying for positions they barely know anything about? Where is the responsibility of the company to train and educate people they wish to employ?

Re:Recycling solution:

[Kernel Kurtz]

Meanwhile, economy is going great, Americans have jobs and a reason to feel good about their economic prospects for the first time in 10 years.

That is true in most places. The long recovery from 2008 is not a Trump exclusive

They'll never choose what's good for the US over what's good for their own people

Those are not necessarily mutually exclusive things. Or didn't use to be anyway.

Re:Prices increase either way.

[Zero__Kelvin]

I always love these "Most people don't understand that Trump just sounds like a moron who went bankrupt several times and couldn't even make money with a casino, but really he is a negotiation wizard and very stable genius who went bankrupt several times and couldn't even make money with a casino" comments. Pure gold.

China is not lowest cost anymore

[Nocturrne]

It wasn't that long ago that Nokia and Motorola had mobile phone factories in the US - I was there in the 90's. Many computers were also made in the US before. The manufacturing of mobile phones is becoming more and more automated. Even in the Foxconn factory (I've been there too), they are using fewer and fewer workers. The main things making the cost of manufacturing in the US higher than China are regulations related to pollution and taxes. The labor cost in China is getting very close to the US - close enough that it is already making no sense to make some things there and then ship them all the way to the other side of the planet.

China stopped being the lowest labor cost place to manufacture for many industries, years ago. An analysis in 2016 found the cost to assemble iphones in the US would only add roughly 5% to the cost - this was 2 years ago. My only point is entire industries that were in the US and EU 25yrs ago could be moved back home.

https://www.technologyreview.c...