Designed in California. Assembled in China. How Apple’s iPhone skews U.S. trade deficit

“U.S. President Donald Trump often tweets from his iPhone about pressuring China to address its $375 billion trade surplus with the United States,” Adam Jourdan reports for Reuters. “But a closer look at the Apple smartphone reveals how the headline figure is distorted.”

“The big trade imbalance – at the heart of a potential trade war, with Trump expected to impose tariffs on Chinese imports this week – exists in large part because of electrical goods and tech, the biggest U.S. import item from China,” Jourdan reports. “Using a rough calculation, that implies the iPhone 7 series added $15.7 billion to the U.S. trade deficit with China last year, about 4.4 percent of the total. That’s also about 22 percent of the $70 billion in cell phones and household goods the U.S. imported from China. ‘With an iPhone, where China is just the final assembler, most of the value (contributed by China) is just the labor rather than the components themselves,’ said John Wu, an economic analyst with a U.S.-based think tank, the Information & Innovation Foundation.”

“For its part, Apple has responded to Trump’s concerns with a pledge to bring some suppliers to the United States. It said in January it planned to pay $55 billion to U.S. suppliers this year,” Jourdan reports. “Over the last decade, Apple shipped 373 million iPhones, worth $101 billion by manufacturing value, in the United States, according to researcher StrategyAnalytics. The iPhone’s contribution to U.S. trade deficits is almost certain to have grown sharply alongside higher retail prices and shipments.”

Read more in the full article here.

MacDailyNews Take: It’ll certainly be interesting to see how it all shakes out.

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  1. It’s not just assembly labor. It is about components, manufacturing tooling, engineers, etc. Apple has said repeatedly that it would love to repatriate their manufacturing. But there are significant resources that are simply unavailable in the US, especially a calamitous shortage of engineers. China (and also India) have schools that are consistently churning out legions of well-qualified engineers. In the US less than 10% of graduating high school seniors are expressing interest in science and engineering education (and an even smaller percentage of those are women). I guess American students are too busy dodging bullets and running out of schools with their hands up to focus on study of such serious subjects.

    1. I teach High School Chemistry and Physics and here is my OPINION on students and their interests.
      It is true that not many students have interest in engineering as a college major and a certain percentage of those realize once they get to college that it isn’t for them. I think the main reason is that it is too hard for them. We have become a society of “serve me” rather than a society of “I can get ahead if I work hard”.
      Students are a product of society and our society if obsessed with entertainment. Entertainment that is always available does not lead to people working harder. It makes them demand more entertainment. It is one aspect of a “serve me” mentality.
      There is a push to make sure that everybody in our country has all the good things and because of that, there are a whole lot of handouts that weren’t available before FDR. That is one factor in the reduction of the “I can get ahead if I work hard” mentality in this country. Of course, India and China don’t care about their poor so you have to make it happen yourself. Do I want to live there? Absolutely not but it does show that economic success takes away some drive in society.
      There are a whole lot of other factors why so many students don’t work hard in school but there isn’t time for all that.

      1. The problem is political correctness. It is a disease that has infected our schools, and brainwashed our children. And the second scourge is social media. Not many kids nowadays know what the meaning of “Hard work” is or the rewards it can generate. Thanks the liberals and media and Hollywood for destroying our culture.

        1. Ridiculous!
          Things swing a little around the center. Overall, Republicans currently have much more political power and often do… both federal and state. Large numbers of states are VERY conservative. Fox News, the Koch brothers and so on have huge influence.

          Conservative influence on American society is AT LEAST as powerful as liberal, if not more so.

        2. Who are our children?? Most americans entertain 2-3 jobs to get by. Their children can hardly get the notion of being served. The only ones being served are the kids of the filthy rich, the latter often being the ones with high morals telling poor people they must work hard and not expect anything to be given to them. Ultraconservatives like f.e the Koch brothers

  2. People have fundamental misunderstanding of what a trade deficit is. There isn’t money sitting in an account somewhere, it’s just that we’re buying more than they’re buying from us; trade deficits are actually a sign of healthy consumption in developed economies, and aren’t detrimental. Could balance be better? Yes. But in all honesty this isn’t a huge deal or any type of money countries owe each other, its normal economic activity.

  3. You can tell how ideologically-driven MDN in their singular lack of criticism of the Trump administration. During President Obama’s terms MDN was a constant source of articles critical of every stand they took, while MDN can’t seem to muster up a single piece critical of the Trump administration – even when his policies are clearly bad for Apple and for consumers of Apple products. It’s the main reason I never click on any of the massive array of ads one has to wade through to view this website.

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