$985 iPad in Brazil a vivid example of how high tariffs and protectionist policies hurt consumers

ZAGG Deal!“The iPad lists at FNAC and other Brazilian stores for $985, almost twice as much as in the U.S. and one of the highest official prices for an iPad anywhere, according to Macworld Brazil, a Brazilian newsletter run by U.S.-based International Data Group,” Lucia Kassai and Cecilia Tornaghi report for Bloomberg.

“The iPad is one example of the many price distortions caused by Brazil’s elaborate industrial policy,” Kassai and Tornaghi report. “Companies that don’t manufacture goods in Brazil have to pay stiff tariffs if they want to sell to the nation’s consumers. Brazil levies a 60 percent tax on the iPad and as much as 90 percent on imported cars. A blouse that retails for $49.50 at The Gap in the U.S. goes for $82 in Brazil at non-Gap outlets. ‘Brazilians sometimes pay luxury-good prices for second-rate items,’ says tax specialist André Mendes Moreira, who writes a widely read financial column and tracks the impact of import taxes on everything from cars to champagne. ‘The consumer is at a clear disadvantage.'”

Kassai and Tornaghi report, “Brazil imposes these stiff taxes on imports to promote local industry and encourage foreign manufacturers to set up factories inside the country. Samsung Electronics, for example, has been manufacturing locally since 1986. It now makes the Galaxy Tab, its answer to the iPad, at one of its Brazilian plants. In contrast to Samsung, Apple is a holdout. In March, Brazilian media reported that Chief Executive Officer Steve Jobs was asked by the city of Rio de Janeiro to set up the country’s first Apple Store in time for the 2020 Olympics. Jobs refused, citing the superhigh taxation of important electronics.”

Read more in the full article here.

62 Comments

  1. No, no, no.
    This protects the Brazilian iPad industry.

    Ballmer: So, what’s Apple up to?
    Chair-Dodger: They finally got Brazilian iPad sales.
    Ballmer: Wow. We’ll never sell that many Zunes….

  2. @Elephant Tales

    Good points. Not to get too political, but another side to the story is if those are the kind of jobs you want to dominate your country? The US has lost many manufacturing jobs to be sure, but that has been replaced with a culture of innovation, where ideas, rather than products are exported. Like you say, balance is necessary. The Brazilians seem to care only about manufacturing, but if no ideas are originating in your country, you are more or less just a slave to those who have the ideas. Likewise not everyone will be able, through laziness or inability, to be an “idea person,” and for those people, manufacturing fits.

  3. “it keeps jobs in Brazil”

    NO, IT DOESN’T. That’s exactly the brain-dead assumption that makes it ridiculously difficult to open any computer-related business in Brazil. Anyone shopping for programming talent would be nuts to hire a development group in a country where even providing them with the tools of the trade will be double the price.

    -jcr

  4. It’s not a true tariff system there. The way our founding fathers set it up, there wouldn’t be a tariff on goods that don’t compete with our own products.

    Nobody in Brazil makes iPads or anything similar, so there shouldn’t be a tariff on it. What this really amounts to is a TAX by the Brazilian Gov’t on their people.

  5. IDArgyll….

    From article: “Samsung Electronics, for example, has been manufacturing locally since 1986. It now makes the Galaxy Tab, its answer to the iPad, at one of its Brazilian plants. “

    (It’s a tariff.)

    Mind me I think the Galaxy Tab is a piece of sh*t compared to the iPad. Just sayin’.

  6. The tariff policy may encourage some companies to manufacture in Brazil, and thus create/keep jobs, but it also excludes jobs by essentially barring sales of goods that are not made in Brazil (like iPads).

    There’s always more to the story than one tax, and I don’t think Apple would ever manufacture in Brazil. But now it won’t open Apple stores, which employ quite a few people either.

    It also may mean your citizens have to settle for or can only get third rate products because there’s no competition. Look how poorly made U.S. cars were until they started getting serious competition from Japanese car makers. It forced the U.S. auto industry to massively improve or die.

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