Apple and other tech firms caught in crossfire as U.S.-China trade war looms

“A shudder reverberated through the global technology sector as the Trump administration considers tariffs on Chinese imports including consumer electronics,” Mark Gurman reports for Bloomberg. “Under the most severe scenario being weighed, the U.S. could impose tariffs on a wide range of Chinese imports from shoes and clothing to tech gadgets, said two people familiar with the matter, who asked not to be identified because the discussions aren’t public.”

“Apple Inc., Amazon.com Inc. and other U.S. technology companies that have products assembled in China may be hurt by such policies,” Gurman reports. “Consumer electronics companies in China looking to make headway in the U.S., including Xiaomi Corp. and Lenovo Group Ltd., may also face new headwinds.”

“The Trump administration is considering combining tariffs with restrictions on Chinese investments in the U.S., which are reviewed for national-security risks,” Gurman reports. “Apple may have the most to lose if Trump’s tariffs define imported goods as all items produced in China — even if the products are designed by American companies. Top U.S. hardware makers from Intel Corp. to Dell Inc. also rely heavily on manufacturing in China, which became the world’s factory floor via a combination of government incentives and cheap labor.”

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“While it’s unclear if Apple would be marked as an importer of Chinese goods, the world’s most valuable company does have a number of key Asian suppliers likely involved,” Gurman reports. “Jun Zhang, an analyst at Rosenblatt Securities, said tariffs would likely be targeted at Chinese manufacturers, rather than U.S. companies with gadgets produced in China.”

Read more in the full article here.

“‘Trade wars are not won, only lost,’ warns Sen. Jeff Flake. This is ahistorical nonsense,” Pat Buchanan writes for The Tribune-Review. “Since Bush I, we have run $12 trillion in trade deficits, and in this century’s first decade, we lost 55,000 factories and 6,000,000 manufacturing jobss. Does Flake see no correlation among America’s decline, China’s rise and the $4 trillion in trade surpluses Beijing has run up at the expense of his own country?”

“The hysteria that greeted Trump’s idea of a 25-percent tariff on steel and a 10-percent tariff on aluminum suggests that restoring this nation’s economic independence is going to be a rocky road,” Buchanan writes. “In 2017, the U.S. trade deficit in goods was almost $800 billion, $375 billion of that with China. If we are to turn that into an $800 billion surplus, sacrifices will have to be made. If we are not up to it, we will lose our independence, as the EU countries have lost theirs.”

“We need to shift taxes off goods produced here and impose taxes on imported goods. A tariff on the nearly $2.5 trillion in goods we import, rising gradually to 20 percent, would initially produce $500 billion in revenue, which could eliminate and replace all taxes on domestic production. As prices of foreign goods rise, U.S. products would replace them. There’s nothing we cannot produce here. And if it can be made in America, it should be made in America.”

“Assume a Lexus costs $50,000 in the U.S. and a 20-percent tariff raises the price to $60,000. What would Japan’s Lexus do? It could accept the loss in U.S. sales, cut prices to hold U.S. market share, or shift production to build cars here and keep its market,” Buchanan writes. “The idea of a policy of economic nationalism to turn our trade deficits (which subtract from GDP) into trade surpluses (which add to GDP) is not to keep foreign goods out, but to induce foreign companies to move production here. We have a strategic asset no one else can match: the U.S. market.”

Abridged article in full here.

Buchanan’s unabridged article is here.

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SEE ALSO:
Apple Macs caught up in President Trump’s aluminum tariff plan – March 2, 2018

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

36 Comments

    1. and i have a hunch it may well get worse, before it gets better… if it does.

      it is one thing to be in perceived trade war through arranged treaties (whether you approve of them or not)

      it is something else again when one abrogates or ignores those treaties and unilaterally imposes tariffs. that can start a round of retaliatory tariff impositions by others upon us, and still others, and in its wake can can wreak havoc on national economies.

      as i recall my long ago economics classes, it was generally agreed that the 1929 depression wound up transforming into the Great Depression on the heels of the smoot-hawley tarriff act.

      not a good precedent.

      1. So are you against international trade and free markets?

        If China, S Korea, etc. want to go broke selling us steel below cost, why should we not take the bargain?

        The US stopped being a major player in Steel long ago- not many mills in Pittsburgh, Gary or Birmingham these days.

      2. sounds like capitalism itself, as practiced by american industry and wall street and their enablers in congress got us into this mess.

        i am not convinced tariffs will solve the problem. if we impose them on steel and aluminum, somebody else imposes them on our wheat, barley, corn rice and soybeans. it just goes on and on

        we are a capitalistic nation and capital goes and flows to where it gets the best return for its investment, which these days is overseas, where third world labor is less expensive than american labor and it is cheaper to build factories and obtain raw materials that back in the good old us of a.

        how do you undo that?

        cut american labor costs by eliminating unions for example ? which likelyresults in lower wages, over time and increased reliance upon cheap imported chinese and other goods? -( walmart makes a good living doing that) which in turn means consumers either can’t or won’t purchase more expensive american goods, which in turn means fewer american jobs because no body is buying more exoensive american products

        or maybe increased use of robotics ? which itself results in fewer jobs as well

        these problems have been a long time coming and there is no easy solutions as long as capital seeks the best return on investment. it is simply the nature of the system.

        if you are blaming gary cohn, – mr. goldman sachs -, then you are blaming the capitalist system itself.

        this is the kind of thing that results when free market capitalism is given free reign. and it won’t take kindly to attempts to reign it in – after which it is no longer free market capitalism.

        is that your goal?

        sounds like catch-22 doesn’t it ?

  1. This is just the start and as predicted, it will keep getting worse until such time as sane voices start being listened to in the White House.

    Apple could lose out very badly on a number of fronts if this madness escalates.

    1. “Assume a Lexus costs $50,000 in the U.S. and a 20-percent tariff raises the price to $60,000. What would Japan’s Lexus do? It could accept the loss in U.S. sales, cut prices to hold U.S. market share, or shift production to build cars here and keep its market.”

      “A tariff on the nearly $2.5 trillion in goods we import, rising gradually to 20 percent, would initially produce $500 billion in revenue, which could eliminate and replace all taxes on domestic production. As prices of foreign goods rise, U.S. products would replace them.”

      “In 2017, the U.S. trade deficit in goods was almost $800 billion, $375 billion of that with China. If we are to turn that into an $800 billion surplus, sacrifices will have to be made. If we are not up to it, we will lose our independence, as the EU countries have lost theirs.” — Pat Buchanan

      If only the U.S. populace had been smart enough to elect Buchanan in 1996, we’d be 22 years ahead of the game by now, not just starting to fix the mess that the globalists FROM BOTH PARTIES have inflicted upon the U.S.A.

      1. What exactly is an “American” car or truck?
        Are the GMC/Chevy and RAM pickups made in Mexico just because the brand is supposedly American? Same for the Buick and Chevy SUVs shipped from China.

        Or is it the Toyota truck built in Texas, the BMWs built in South Carolina, the Subarus built in Indiana, the Hondas built in Ohio, the Mercedes built in Alabama, the Hyundais & Toyotas built in Mississippi, the Nissans & Volkswagens built in Tennessee?

        1. Yeah, funny….I have a Dodge Challenger. It was made in Canada, the motor made in Mexico, the transmission made in Germany, the supercharger made in Japan. FCA is an Italian company. About the only thing ‘American’ on it is the name.

        2. President Trump says he is doing all of this to protect the American steel industry, which employs less than 150,000 American residents. At least 6.5 million work in industries that buy steel. Let’s just look at the car industry, since that is where Mr. Trump has threatened 35% tariffs if our allies respond to our unilateral action on steel and aluminum.

          The Japanese automakers have 87,788 direct American employees and 462,931 total US employees (including dealerships). The German automakers’ US manufacturing operations alone create 110,000 American jobs. Hyundai supports about 11,000 American employees, plus 32,000 in dealerships; the related South Korean brand, Kia, is only slightly smaller.

          Chrysler is foreign controlled, but has 71,100 direct US employees supplying 2,328 dealerships. The remaining US carmakers manufacture at least a quarter of their cars overseas (or elsewhere in North America), and buy many of their parts there, so they would be hit by the tariffs, too.

          General Motors alone has over 100,000 American direct employees, not including those working for suppliers or dealerships (or those who provide goods and services to the direct employees). Ford’s 80,000 direct employees supply 3,300 dealerships.

          All those car workers are paid at least as well as the steelworkers, so they collectively contribute more to the economy, pay a lot more taxes, and represent many more voters. That’s before we even start looking at the rest of the 6.5 million people whose jobs depend on affordable steel and aluminum. For completeness, we should also look at the further millions whose livelihood depends on providing goods and services to all those folks.

          Trade wars aren’t good and they aren’t easily won.

          1. Jobs impacted by Trump’s Aluminum & Steel Tarriff by state:
            1-Missouri
            2-Louisiana
            3-Connecticut
            4-Maryland
            5-Arkansas
            6-Iowa
            7-West Virginia
            8-Alabama
            9-Ohio
            10-North Dakota
            A lot of Red States on that list. Data from MarketWatch (Dow Jones/WSJ/NewsCorp).

      2. Sort of like this??
        Swedish appliance maker Electrolux Group, which bases its North American operations in Charlotte, said it’s putting on hold a planned expansion of a Tennessee factory as it evaluates tariffs on steel and aluminum imports announced Thursday by President Donald Trump.

        Electrolux in January said it is investing more than $250 million in its Springfield, Tenn., facility, expanding production by adding 400,000 square feet for manufacturing. Construction was set to start in late 2018 and continue into 2020.

        “Unfortunately, this tariff decision gives foreign appliance manufacturers a cost advantage that is hard to compete against,” the company said Friday. “We are evaluating the decision and are concerned enough about the negative financial impact that we are putting our $250 million Tennessee expansion on hold until the order is signed and final details are understood.”

        The company also noted that currently “100 percent of the carbon steel we use in our U.S. manufacturing comes from American steel mills.”

        Read more here: http://www.charlotteobserver.com/news/business/article203060969.html#storylink=cpy

        1. 1. First 2014, Then 2016 did not say Trump was “first.”
          2. First 2014, Then 2016 said Trump put America and her workers first.
          3. Trump is “barely human?”
          4. The depth of your TDS is laughable.
          5. America deserves better? What, like globalists such as BushClintonBushObama who hollowed out America and sold her off to the highest bidder?
          6. You’re a fool.

          1. There’s that comprehension thing again. The answer to putting America First is not Trump.

            And her workers…!? Trump?! The stiff?!

            Oh, and if you read higher up it’s on globalization that I might agree even a little.

            Get better fact checker.

        1. You should have noticed that Mr. Trump (who was elected as a Republican) is the one insisting that Americans need the government to protect them from the free market. He is the one saying that American iron and aluminum companies and workers can’t compete without Uncle Sugar’s intervention to help them. He is threatening government intervention in the world economy on a scale hardly seen since FDR. There is plenty of basis to blame the Democrats, but this one is not their baby.

  2. Apparently Trade Wars are easy to win. Not sure how that works because that would apply to both sides which means the ease is either cancelled out or that both sides can win, in which case if it was that easy all countries would be involved in them.

  3. When George W. Bush introduced steel tariffs in 2002, one analysis found that higher prices cost the U.S. economy more than 200,000 jobs. That’s more than the total number of people then employed in the steel industry.

  4. Certainly this is meant as motivation for companies like Apple to move all manufacturing operations stateside. The problem with that is if there is still a trade war going on goods from Apple HERE could be tariffed and penalized over THERE.

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