Peter Navarro is gunning for a trade war with China.
The new administration has named the author of Death by China to head its National Trade Council, and at least one China watcher is freaking out.
“[Peter] Navarro’s appointment specifically and Trump’s clear signaling about China generally should greatly concern Apple in particular,” writes Ben Thompson from his home base in Taiwan. “To say he is a China hawk is an understatement.”
In today’s Stratechery column, Thompson quotes Navarro in 2012 riffing on China’s “weapons of jobs destruction” in the Huffington Post:
You cannot really talk about why Apple products are produced in Shenzhen rather than Portland or Seattle or Los Angeles without dealing with the most important source of China’s competitive edge: its unfair trade practices. China uses five major unfair trade practices — what I rightly call its “weapons of job destruction” — to tilt the global factory floor away from American workers, and for more than a decade now our political leadership has done nothing about it.
The most potent of these weapons of job destruction is China’s currency manipulation…A second powerful weapon is that of illegal export subsidies…a third weapon is China’s counterfeiting and piracy…the fourth weapon of job destruction [is] the unrestricted ability of a Chinese manufacturer to “pollute for profits”…the fifth weapon of job destruction is [mistreatment of workers].
What’s so disturbing isn’t just Foxconn — which sadly, is probably the very best factory in China — it’s that American corporate executives are so willing to take advantage of the Chinese people to make a buck while gutting this nation.
It’s not clear what kind of leverage Navarro could bring to bear on those weapons of job destruction, but as Thompson points out, any change from the status quo—”whether that be shifting manufacturing to the United States or some sort of tariff on imported goods”—would result for Apple in some combination of reduced flexibility, lower margins, and higher prices.
“The kicker” Thompson concludes, “is that Apple would pay on both ends: China has already singled out the iPhone as a means of retaliation, which means any sort of trade war will hurt Apple in its two biggest markets simultaneously.”
How much could a trade war cost Apple investors? See Apple and Trump: A tax and trade policy calculator.