Trump and Apple Clash in Trade Wars But Who is Right?
The average citizen of the United States, living in 2018, is no stranger to the string of tariffs, the “Trump tariffs” imposed by the president of the country, Donald Trump, on goods being imported into the U.S. from other countries. Some of these countries that have these taxes placed on them, including the likes of China, Canada, India and even the European Union, have retaliated by placing retaliatory tariffs on the U.S.
One of such countries, China, is where tech giant, Apple, assembles most of its top-selling products such as the iPhone as well as many others of its products. It could spell trouble for the huge profits Apple has been making if China decides to directly level tariffs on Apple products made in China. This could also mean a massive price increase for many Apple products today. Tim Bajarin, a leading technology consultant stated that an iPhone that now costs a thousand USD could sell for twice as much as a result of the trade war between the two countries.
Because of this, CEO of Apple Inc. met with President Donald Trump and members of his cabinet, in a bid to advise the administration against a trade war as the effects of which will be devastating on the American economy and on Apple itself. Tim Cook, while praising the corporate tax rules the administration passed in the previous year, indicated that engaging in a trade war would negate their effects. The Trump administration has decided that it will not place tariffs on iPhones which are completely assembled in China, but this does not mean that Apple Inc. is out of the woods yet. China could decide to take measures against Apple locally in response to Trump’s moves.
Trump offers a “solution” to the problem of the increased cost of production that could be brought about by the effects of his tariffs in a tweet he posted on September 8th 2018, stating “build factories in the USA and make iPhone here, instead of China”. This, however, poses many issues to major tech companies.
First, the cost of production in China is far lower than in the United States. Skilled workers in China are paid about $100 a week which is less than what would be the case in America. Secondly, the parts that are required to assemble these products are largely available in Asia. Many other companies, including Amazon and Samsung, depend on parts made in Asian countries to assemble most of their products. America can barely compete with Asia in the area of manufacturing, so it would be very difficult to attempt to limit the manufacturing of American products to the United States alone. In time, advances could be made to improve the skill and facilities in the United States needed to serve the manufacturing needs of such companies, but for now, levelling such heavy taxes on products from other countries would be a poor step for America to take.