“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.
It works much better in the US where the companies buy the politicians directly and don’t have to go through the consumers to get corporate welfare.
True about tarrifs. Also true is that it keeps jobs in Brazil. How to choose? Higher prices or lower employment and lower wages. Gotta get out of the either/or world and work with balance between the two forces.
americans never understand why electronics, other import items are so expensive. you americans are so lucky son of bitches.
They still aren’t obligated to buy any of them. And after using an iPad for 5 months, I’d say even at that price, it’s still worth it.
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….
8^þ: You nailed it.
@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.
They might not have ideas but at least they have jobs lol. We’re selling alot of ideas in the US with all of our employment going to China. Who wins? hehe
I think edward was right. Americans are lucky bastards, Apple products are like 25% up to 50% more expensive here in my country than they cost in US.
“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
If they are producing the “tools of the trade” in Brazil it’s a non-issue now isn’t it?
I think we should start taxing their cocunuts at 100%.
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.
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’.
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.
You can have competition of products in your own country, with no other countries products involved, thus still improving product. The Japanese analogy you’re using isn’t relevant nowadays. An Apple store will net very few jobs compared to a Apple manufacturing plant. (Same goes for here in the states.) I honestly think in the long run Brazil has a good game plan that will benefit their citizens quite well. Kudos to them. I’d rather have a Galaxy Tab with a decent job instead of an iPad on welfare, lol!
@ edward
I’ve never been so happy to be called a son of a bitch!
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Overall USA’s tax rate is lower than most European countries.
@John C. Randolph
I think you make one of the best points of this thread. (My personal opinion)
@Wha
If I’m is looking to hire a development group for my project, chances are really good that the tools they need are not made in Brazil.
John’s right, Brazil can keep their labor jobs, I’ll go elsewhere for the talent.
It is not so clear cut as you believe, MDN. Read a bit more perspective from other countries: http://www.guardian.co.uk/business/2005/dec/12/5
Americans forget that the USA was built behind protectionist, high-tariff policy well into the late 1800s – essentially until cost of business (labor) prompted US corporate entities to demand (and of course get – corporations get whatever they want) the “free trade” agreements so jobs could be easily outsourced.
Just as the Britain ceded its industrial power in the 18th century to the USA for cheap/free labor, so too is the USA giving it all away to China today.
The difference is that in the 1800s the ratio of resources per person on the planet was huge compared to today. China, with more people and now more wealth and growing military power, will likely win any future resource war and/or literally bankrupt the USA in economic war. The USA is committing industrial suicide by outsourcing and running huge personal and federal deficits. But there is hope of preventing modern Rome from crumbling to ruin: reasonable protectionism necessary to maintain employment, self-sufficiency, and sustainability. This doesn’t mean the abandonment of trade, it means foregoing cheap junk in order to maintain local infrastructure, health, and knowledge. If China continues to manipulate currency, then tariffs on Chinese imports should be imposed, and corporate leaders might consider production in the same hemisphere as its intended sales markets, maybe even putting Americans back to work in production rather than distribution industries.
Brazil’s economic track record, by the way, puts the US to shame. Maybe they know some things the USA has forgotten?
Thanks Mike I was anxiously looking forward to someone making sense with half a brain. Goodnight yall!
(Mind me yer full-brained lol)
Finally. Reason, not tease’n.
Bless you.
Brazil is one of the fastest-growing economies in the world, with booming exports. Clearly they’re doing something right.
Truth is beauty, Mike.. what you said was absolutely beautiful. Thanks for the link. You’re comments really helped me understand a lot of things and I can’t thank you enough. I hope people can see your comment for what it is and understand the importance of it. Reality-based thinking is so necessary for us and our loved ones continuing forward.
Agreed… bless you!
The Other Steve and John C. Randolph, please disregard my discussions above and just give a listen to what Mike has said in his post. I am not able to say it as elegantly as he can.