“A story in today’s WSJ explains ‘How the iPhone 6 Fueled a Record U.S. Trade Gap With China.'” James Joyner writes for Outside The Beltway,
Just one more feature of the iPhone 6: It helped fuel a record U.S. trade gap with China in September.
Call it the #iPhoneEffect.
Imports from the Asian giant hit $44.9 billion, up nearly 13% on the month. Most of the $5 billion increase in imports was fueled by a $3 billion surge in buying of cell phones, a deluge that coincided with Apple’s release of the iPhone 6 and 6 Plus, both of which are assembled in China.
It’s not the first #iPhoneEffect: In 2012, iPhone 5 sales were seen boosting U.S. economic growth, a feat that Congress, the White House and the Federal Reserve had difficulty replicating at the time.
“But this just shows how silly the ‘trade gap’ concept is,” Joyner writes. “It’s difficult to find precise figures, but the vast majority of the profits on each iPhone sold go to the United States, not China… The main reason that iPhones are built in China, it seems, isn’t even cheap labor. One estimate has the cost savings at a mere $4 per phone. Rather, by importing the phones from China, Apple saves a massive amount in taxes. Regardless, it’s silly to pretend that the country that makes $162 on an iPad is running a deficit with the country that makes $8.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Brian” for the heads up.]
I wish the #iPhoneEffect benefited US exports TO China. That’s one of many reasons I’ve been nagging at Apple for years to #GetTheHellOutOfChina.
More fun things our American dollars have enabled in China:
China confirms hypersonic missile carrier test
China Announces 12.2% Increase in Military Budget
Jeez, this guy doesn’t even understand basic economics.
First, the fact that the US makes $162 and China makes $8 has nothing to do with the trade deficit. The fact that we buy (in this case) $8 of good from China and they buy nothing from us means we have an $8 trade deficit.
Secondly, sourcing from China increases Apple’s taxes. If it cost $108 to make it here and $8 to make it in China, Apple’s profits would be reduced by $100, thus reducing taxes by $35.