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

[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

[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.

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.

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.

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

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.

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.