Kuo: Apple Better Off Taking 25% Tariff Hit Than Move iPhone Production to US

[wmealer]

It’s false because the Department of Commerce says otherwise, and the President’s precious “formula” obviously ignored what Commerce says. I honestly don’t know why you’d believe the President’s numbers over those of the federal department whose tasks directly require knowledge of foreign tariffs, especially since the President’s completely un-vetted numbers included a tax on penguins (do we really have to go there again?). His numbers are based upon trade deficits, not actual tariffs, and that’s what makes them both false (because he called them “tariffs”) and stupid.

You can choose to believe the President’s sweet little flannelboard if you want, though. That doesn’t make them anything other than fantasy numbers someone (ChatGPT? Probably) dreamed up, though.

You do realize the Commerce Dept is part of the executive branch, right? Commerce Secretary Howard Lutnick was the guy handing that sweet little flannelboard to Trump outside the White House at the press event. Sure, Trump called all the various trade barriers tariffs to simplify the messaging, but even the boards were more specific to all the main factors used to arrive at their numbers.

I'm not a Trump sycophant, but I do take issue with people opposing anything Trump does, simply because it's Trump.

 

[BaldiMac]

You most certainly haven't shown the 99% figure was false. Granted, that figure isn't the raw tariff number, but just because you're skeptical of the complex formula used by the WH to arrive at that number, or choose to believe the unnamed anonymous sources mentioned in the article over the US Government, doesn't make it untrue.

There was no complex formula. They divided the trade deficit by imports. A number that has absolutely nothing to do with tariffs charged by Lesotho. They may as well have divided the number of cats by the number of dogs.

 

[It’s always something]

You do realize the Commerce Dept is part of the executive branch, right? Commerce Secretary Howard Lutnick was the guy handing that sweet little flannelboard outside the White House at the press event.

The numbers were totally un-vetted. Lutnick never checked with his own department (if he left anyone employed there, which I doubt). Check the website. I provided the link: 0-30% tariffs by Lesotho. Not 99%. And the entire world has already had the discussion about the stupid formula, which specifically did *not* include any actual tariffs. You can read about it here: “The math is simple: take the U.S. goods trade deficit with a country, divide it by that country's exports to the U.S. and turn it into a percentage figure; then cut that figure in half to produce the U.S. "reciprocal" tariff, with a floor of 10%.”

 

[Allen_Wentz]

But will Apple take the tariff or will the consumer?
And how will this affect Every Other Phone that is also not made in the US?

How can you ask "will Apple take the tariff?" No company can just give a government 25% of product revenue without passing those costs to the consumers; they would go quickly bankrupt. Only the inane politician creating the tariff is making the absurd claim that Apple or China or India or whomever is the one that pays the tariff rather than USA customers.

Some of Trump's cult claim that when Trump blathers about tariffs it is just a harmless negotiating ploy, "the art of the deal." Very untrue.

When a POTUS talks tariffs businesses act in their own best interests. So if a business makes a complex product (e.g. a tractor) that requires a specific relatively inexpensive part (e.g. a fuel pump component) only made in Luzon and some POTUS talks about putting a tariff on products from the Philippines, what will that business do? Answer: a smart business will (instead of the just-in-time ordering smart businesses follow today) buy a large supply of said fuel pump component and hoard to isolate the business from the supply chain disruption that always comes with tariffs.

Note that all it takes to disrupt supply chains and raise prices is for some moron POTUS to just talk about tariffs. Trump's on-again off-again tariff blathering disrupts supply chains even worse. Once company A hoards fuel pump components, companies B, C, etc. are screwed and prices rise.

The example above used a fuel pump component for exemplary purposes, but note that the things we buy all start from lots of parts (thousands). Each part is a potential supply chain disruption when some POTUS talks tariffs just to call attention to himself.

 

[Allen_Wentz]

I don’t think those tariffs will happen, it’s a threat to get Apple to move some manufacturing to the US …
Moving iPhone assembly to another location is a multi-year effort, but some other product will move to US and someone will be happy

Wrong. There is no upside to such tariffs.

 

[Allen_Wentz]

Get a grip. You just explained EVERY politician.

Also inflation of all of life’s essentials started in 2022….. But don’t let facts get in the way of your emotions and more importantly the price of your beloved iPhone!

A real cynic might say "You just explained EVERY politician."

But the grift and corruption seen with the current POTUS is worse than others by orders of magnitude. Far, far worse. Be a criminal afraid to come to the USA for fear of arrest? No problem, buy a few $million in otherwise worthless Trump meme coins and get invited to dinner with the POTUS. And Trump refused to divest from his sleazy real estate operation, so his otherwise incompetent silver-spoon kids are making corrupt deals around the world.

Or we could dicuss Truth Social and how it is used as a mechanism for individuals to buy favor with our fully corrupt POTUS. Only a Congress of Republican pols that fear him too much to object to his grift keep Trump from being impeached and/or in jail.

 

[wmealer]

The numbers were totally un-vetted. Lutnick never checked with his own department (if he left anyone employed there, which I doubt). Check the website. I provided the link: 0-30% tariffs by Lesotho. Not 99%. And the entire world has already had the discussion about the stupid formula, which specifically did *not* include any actual tariffs. You can read about it here: “The math is simple: take the U.S. goods trade deficit with a country, divide it by that country's exports to the U.S. and turn it into a percentage figure; then cut that figure in half to produce the U.S. "reciprocal" tariff, with a floor of 10%.”

Assuming all that is true, I stand corrected on the 99% figure. The fact remains the US still has a trade deficit with Lesotho, which was the whole point of my original response. Impasse declared.

 

[Allen_Wentz]

Deep down, I think he does. IMO, the tariffs debacle is more of a negotiation tool than a real expectation of bringing manufacturing back to the USA on a large scale. Labor, laws, red tape, lawsuits, insurance, unions, taxes, etc. are too much of a hurdle.

No, the tariffs debacle is not a "negotiation tool." Just talking about tariffs disrupts supply chains and raises prices as businesses (wisely) hoard components. The tariffs debacle is just that, the tariffs debacle.

 

[Scott6666]

I don’t think we here can survive another 3.5 years of this nightmare. We are no longer safe 😭

What precisely are you going to do about it? Nothing. And you’ll survive this. You’re pretty mollycoddled if this threatens your survival.

 

[Allen_Wentz]

Problem is that if Apple ignores Trump's request to move to the USA - and just pays the 25% tariffs, Trump will just keep increasing the tariffs to 200% or so.

You act like there may be some rationality to what Trump does. There is not. He just wants attention, good/bad/whatever.

 

[Allen_Wentz]

The iPhone is made in china so I’m sure there is a way to target certain products made in other countries.

Sure some idiot POTUS can makes USA buyers pay more for products from China or wherever. That stupid action by some idiot POTUS will not magically make the USA a good place to make a specific product. It will however disrupt supply chains and raise prices.

 

[wmealer]

A huge chunk of US cars aren't road legal in Europe because we have far higher standards. Not only that why would we buy any of them when we have better cars here? We also have Lexus and Toyota here because, well, they're better too.

I've got to ask - why is your middle class US neighbourhood full of foreign cars? Aren't yours better? Surely this is the free market everyone speaks of?

To note I did I own a US designed car. Worst car I ever had. My daughter spitting on it there. Perhaps that's the problem.

View attachment 2513278

I'm a loyal, longtime BMW owner myself, so I understand your point about the superiority of German engineering. My point is the EU severely limits how many US cars are imported into the EU. It's much less about the free market, and more about your respective government(s) dictating how many US cars are made available to European consumers.

 

[Artemiz]

I'm so relieved now that Gemini has put an end to our human debate. Ask Gemini if the BMW 3-, 5-, or 7-series sedans, or the Mercedes C, E, and S class cars suffer from poor sales in Europe because of the narrow roads, or because they aren't very fuel efficient.

Both are German, a country known for world-class engineering. Given a choice between a Ford and a BMW in the same class, the winner is always BMW.
While we’re focused on dismantling regulatory authorities that are established to help the consumers, Germany’s doing the opposite. Anti-idling laws and GDPR are just two examples. Personal preference to their own home brands is another factor.

All Gemini did was simply perform a Google search and summarize the results. If you have any evidence to the contrary, lay it on me without the sarcasm.

 

[Artemiz]

You do realize the Commerce Dept is part of the executive branch, right? Commerce Secretary Howard Lutnick was the guy handing that sweet little flannelboard to Trump outside the White House at the press event. Sure, Trump called all the various trade barriers tariffs to simplify the messaging, but even the boards were more specific to all the main factors used to arrive at their numbers.

I'm not a Trump sycophant, but I do take issue with people opposing anything Trump does, simply because it's Trump.

Wasn’t there a country of penguins in the list that got hit with a 75% tariff or something?
I don’t think anyone would oppose targeted tariffs and using that as a negotiation tactic to benefit us. It’s the blanket tariffs people are calling stupid. This isn’t a simple barter system like in the old days. Economy in its current state is much more complicated with a lot of variables.

 

[technole]

If congress had a spine they would do what was done during the Nixon administration, reigned in executive from getting the country in prolonged wars beyond 2 months without congressional approval. War powers act got passed by veto override. They can do the same with IEEPA if they wanted to, any prolong emergency tariff would require their approval. It's actually an Article I power just emergency powers delegated to Article II.

 

[Allen_Wentz]

China’s economy is already feeling the effects of the tariffs, which is why they folded and started negotiating. They are a country that would love to eclipse our nation and we cannot let that happen.

1) You must both be drinking Trump Kool-Aid and never have studied China even a little. Because China's rulers do not reel from "China’s economy is already feeling the effects of the tariffs," and China's rulers only act long term. The suggestion that China's rulers "folded and started negotiating" in just a few weeks because some temporary POTUS decided to charge USA citizens a fee to buy goods made in China is preposterous. Unless someone is both drinking Trump Kool-Aid and has never studied China, even a little.

What is guaranteed, however, is that China's rulers will play Trump. Trump is pure narcissist and dumb as a brick so he will be easy to play. Or pay. Trump can be easily directly bought by buying his otherwise useless meme cryptocoin or by buying into his Truth Social con; or less directly by giving deals to his real estate grift.

2) You say "They are a country that would love to eclipse our nation and we cannot let that happen." We agree. But unfortunately the USA just elected a narcissistic fool for POTUS. Trump has already been supporting our enemies (Putin) and disrupting our relationships with our allies (Canada, Mexico, Europe). NATO's very existence is at risk. China's rulers must be celebrating every day of Trump's brief time in office.

 

[Allen_Wentz]

That's quite a broad claim you're making about more than 77 million voters. The few of his supporters you might know may be uninformed, but I can assure you there are quite a lot of us out here who overwhelmingly support this pro-American agenda. Any U.S. president has considerable leverage to incentivize American companies to bring their manufacturing back to the US. Prior to Trump, very few (if any) others have dared to wield it in such a way. If he is successful in these attempts to mitigate much of the unfair global trade imbalances, while also bringing a large portion of manufacturing back to the States, it's just one of the many reasons he will be seen as one of the most consequential presidents in this country's short history.

Instead of saying "this pro-American agenda" you should realize that it is a faux pro-American agenda. Just talk, claiming a tariff to China when the reality is A) that USA citizens pay any tariff and B) that Trump's blathering has already disrupted supply chains with consequent increases in business costs worldwide.

Some POTUS attacking USA's allies (Canada, Mexico, Europe) and threatening NATO only fools the folks drinking Trump Kool-Aid into believing it is a "pro-American agenda" because in reality it is denigrating our USA around the world.

Our enemies Putin and China are no doubt thrilled. There are good reasons Putin invested so heavily in getting Trump elected.

 

[Allen_Wentz]

It’s been a few years since I saw comparative quotes. But labour rates in Texas used to be appx 10x of those in China for server assembly. Obviously I don’t know the fraction of the product cost made up by labour on an iPhone, but even at 25%, I doubt US manufacturing would be cheaper.

Plus the USA simply lacks the properly skilled workers. Ask any tech CEO. And the Trump admin is doing its best to disrupt education in the USA. Go figure.

 

[Allen_Wentz]

It DOES encourage long term planning. IN the US.

No, it does not. Irrational behavior by some narcissistic POTUS does NOT "encourage long term planning. IN the US." Any CEO worth the title will be thinking long term, and treat the malignant narcissist POTUS as a short term anomaly to deal with. Pay a $million to his inauguration, buy expensive dinners to show fealty, maybe buy some worthless Trump meme cryptocoins as a pure bribe, or have corporate events in tacky Trump properties, or buy into Trurh Social...

 

[Allen_Wentz]

The market will dictate this. The US market will not pay $3K for an iPhone.

?? Sure Apple will sell less iPhones in the USA if Trump charges us buyers an extra 25%. But Trump forcing you and me to pay 25% more will not magically make the USA a good place to build iPhones.

 

[Allen_Wentz]

If it is so be it. Jesus has the last say.

If Jesus had a say there would be no Trump dismantling the USA.

 

[ForkHandles]

Once again, it's quite amusing how some people will toss anyone who happens to disagree with them on a particular issue into their big "basket of deplorables." You don't know what news outlets I consume any more than I know how you keep yourself informed (or don't, as the case may be). I certainly don't mind debating the merits of the article here, but if this somehow spirals into some sort of progressive v. conservative pile-on, I can certainly hold my own. Especially with the likes of anyone hurling ad-hominem attacks.

You said

“If he is successful in these attempts to mitigate much of the unfair global trade imbalances, while also bringing a large portion of manufacturing back to the States“

There are no unfair global trade balances, no more than there are unfair supermarket balances in your own finances.

Americans are weapons of mass consumption, per head of population you get through more energy, plastics, foods than most other nations. Your wages(average) are massive, as such you will never, ever, be able to compete in a manufacturing context.

You import cheap, add value and consume, so voraciously that you have deficits with virtually every country.

There is an argument to say that if you impose tariffs, create a recession, make everyone much poorer, then they might just want to screw in millions of screws into iPhone for $4 an hour. But then wages drop, prices go up and you’re no long A country of mass consumption.

The truth is that America has a huge problem it’s called wealth disparity, the richest earn six times more than the poorest, in Europe it’s three times. The richest three men in USA have more wealth than the poorest 50% combined. Even with that statistic Musk is raping The country of all safety nets for the poorest in society.

 

[mielie]

If this was the other way around and the EU was imposing a 25% tariff on all iPhones I would have expected to see a few dozen comments by now saying Apple should just stop selling in the EU….

 

[macfacts]

I was so looking forward to being one of the millions of folks screwing in the little screws!

The vice President says china has peasants in factories manufacturing items for Americans to buy and trump wants those factories in USA, meaning trump wants office workers and workers in the service industry to start doing peasant jobs.

 

[skitidetdu]

What are the tariffs paid for? The retail price of $999 for example or just on the production costs of an iPhone? Maybe Apple could do the last step of the assembly in the US. Then it is technically produced in the US.

Wouldn’t all the parts shipped from china get tariffed anyway?