The Wall St. Journal discovers iPhones are made in China

From Tripp Mickle’s Apple Vulnerable in U.S.-China Trade Showdown ($) in Tuesday’s Journal:

By assembling its phones in China, Apple Inc. tapped into China’s vast workforce and formidable manufacturing capabilities. But it also made Apple’s most-profitable product a Chinese export—one that could be subject to tariffs in the trade dispute…

Smartphones weren’t included in the levies on $34 billion of Chinese goods imposed on July 6, nor are they targeted in a second round worth $16 billion that is expected in August. They also haven’t been included in a third round of $200 billion in goods that the Trump administration identified earlier this month…

But now, President Donald Trump is threatening levies on a total of $500 billion in imports, which would cover just about everything China ships to the U.S., including iPhones, trade experts say…

“They should be nervous,” said David Dollar, a China scholar at the Brookings Institution, who was the U.S. Treasury’s top official in Beijing during the Obama administration…

Apple would be a likely target because of the iPhone’s 9% share of China’s smartphone market, according to Mr. Dollar and other trade experts.

My take: I’m not saying the new levies couldn’t hurt iPhones. But the Journal is reporting that they would, and it doesn’t have anybody on the record but Mr. Dollar saying so. Pretty thin stuff.

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7 Comments

  1. Ken Cheng said:
    “Apple would be a likely target because of the iPhone’s 9% share of China’s smartphone market, according to Mr. Dollar”
    The way I read that sentence, is that the iPhone would be a Chinese target for retaliatory tariffs, not a target for US levies.

    Plenty of studies have shown the value-added by the Chinese assembly of iPhones is a tiny fraction of the total value of the phone. So, while the recorded US deficit may be high for a manufactured iPhone, the actual deficit may be very small. However, facts may not matter when it comes to a trade war.

    0
    July 24, 2018
    • David Drinkwater said:
      While the value added by assembly may be small, an unassembled phone cannot be sold, and, to me, Tim’s long line of commentary on “why China?” is that it would be extremely difficult – and surely more costly – to assemble iPhones anywhere else.

      That said, I think it would be politically unwise for Trump to interfere with Apple’s iPhone business, because so many people want them, especially the affluent, and I really don’t think Trump wants to piss of that audience.

      1
      July 24, 2018

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