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Trump Says iPhones Will Get More Expensive. Actually, It's Going to Be Much Worse Than That.

Building iPhones entirely in the U.S. would double or triple their retail prices. There's no way Apple is going to do that.

Xinhua/Sipa USA/NewscomXinhua/Sipa USA/NewscomIn what seems like an admission that his trade war is neither "good" nor "easy to win," President Donald Trump tweeted over the weekend that prices for Apple products, like iPhones, "may increase because of the massive Tariffs we may be imposing on China."

This kind of honesty is actually a positive step for the administration. Yes, it's misleading to say that the tariffs are being imposed "on China"—tariffs are import taxes paid by consumers, not by foreign producers—but being upfront about how tariffs will increase prices for Americans is a marked improvement over his months of denials, let alone his claim that "tariffs are the greatest."

Still, the Saturday tweet really undersells the potential impact of Trump's plan to slap 25 percent tariffs on another $200 billion of Chinese imports. It is not only Apple products but potentially hundreds of consumer goods that could spike in price—from computers, tablets, and video games to vacuum cleaners, furniture, and children's toys. All just in time for Christmas.

In short, American consumers are about to feel the brunt of tariffs in the same way that aluminum- and steel-consuming industries have for months. The first rounds of tariffs focused on industrial goods and raw materials, and they have increased costs without achiving their primary policy goal of on-shoring manufacturing jobs.

Despite the lack of evidence that the tariffs are working—indeed, without understanding why he even wants tariffs in the first place, if Bob Woodward's new book is to be believed—Trump is now doubling down.

Adding 25 percent to the cost of a new iPhone will hike the price of Apple's low-end product to more than $200. If cell phone prices spike, or if there's a hit to Apple stock (a major driver of the stock market as a whole, and a key component of mutual funds held by many average investors as part of retirement accounts and the like), this will quickly go from being an economic problem for Trump to a political one.

But Trump has what he says is an easy solution.

"Make your products in the United States instead of China," he tweeted this weekend. "Start building new plants now."

Even if it were possible for Apple to re-route complex global supply chains that have been years in the making, all to appease Trump's desire for an American-made iPhone, would consumers benefit?

No. An American-made iPhone would cost more than $2,000 at the retail level, according to an analysis by Marketplace.

One interesting detail in that Marketplace report: Cheap Chinese labor, contrary to popular opinion, is not the source of most of the savings achieved by building iPhones in China. Apple pays about $5 per iPhone in labor costs, but building phones in the U.S. would add only about $10 to that total. The real problem with trying to make an all-American iPhone is that cell phone components and parts are sourced all around the world. The pieces that go into an iPhone cost Apple about $190 to puchase, but would easily cost three times as much to produce in the U.S.

Even if it were possible to force, or entice, Apple to make an iPhone in the U.S., you'd end up with a far more expensive product. Or as Michael Froman, a former U.S. trade representative, told Inside Trade reporter Anshu Siripurapu in December:

It turns out that Apple knows more about the process of making iPhones than Donald Trump does. Tariffs will hurt American consumers, but they won't make Apple build iPhones in the U.S.—because that would hurt consumers even worse.

Photo Credit: Xinhua/Sipa USA/Newscom

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  • Fist of Etiquette||

    You knew at some point the free market was going to fail to deliver us iPhones.

  • Earth Skeptic||

    I can hear the Sandersnistas: "Free phones!"

  • Last of the Shitlords||

    Is there an actual business analysis that an iPhone would actually cost anywhere enlarge $3k at retail if manufactured here? I'm skeptical of that. It's like all the people who said that unless we let illegals pick lettuce that the price would double. When in fact the difference in price might be around ten percent of actual retail market prices.

  • sarcasmic||

    You mean that when we abandon comparative advantage in favor of protectionism and self sufficiency, that we become poorer as a result because everything becomes more expensive? If only there were a dismal science that had been explaining this for a couple centuries.

  • Aloysious||

    Critical Theory? Intersectionalism? Liberation Theology? Gnome Chompsky?

  • ||

    You mean that when we abandon comparative advantage

    Is there a one drop rule for tariffs? If China's able to make I phones for $500 and the US can only make them for $3000 and the US imposes a 1% tariff on iPhones, does China suddenly become incapable of making them at any price less than $3000? Do American consumers automatically default to buying the $3000 American-made phone?

  • sarcasmic||

    It's a 25% tariff, and no it won't result in iPhones being made in the US. Maybe Dear Leader will raise the tariffs to 200% to force that to happen. And all the Trumptards will be dancing in the streets, praising Dear Leader for making the country poorer.

  • ||

    And all the Trumptards will be dancing in the streets, praising Dear Leader for making the country poorer.

    Again, I'm not in favor of the tariffs, but let's not continue to pretend that China is some paragon of free market pricing and incentives. The tariffs are wrong, but they aren't going to topple the economy any more than a military base will flip Guam. I don't have the answer, but paying the Chinese to make solar panels for us for the next century isn't it any more than hosing the Saudis for oil has been for the last one.

  • sarcasmic||

    Are you drinking in the AM? I seriously don't understand what you wrote.

  • ||

    Are you drinking in the AM?

    You're the one throwing out 200% tariffs.

    I seriously don't understand what you wrote.

    Of course. Shrieking "There's a problem! Shit's fucked up!" is squarely in your wheelhouse but when it comes ideas about doing something to oppose China's market dominance you develop Alzheimers.

  • sarcasmic||

    I threw out 200% tariffs as a random guess at what it might take to make it cheaper to produce iPhones in the US. Context, ever heard of it?

    And I don't see "China's market dominance" as something that needs to be opposed. They can make stuff cheaper. Good. We buy it from them and concentrate on what we can do better. It's called comparative advantage.

    It's as if Trump has managed to cause his supporters to forget everything they ever learned about economics.

  • ||

    I threw out 200% tariffs as a random guess at what it might take to make it cheaper to produce iPhones in the US. Context, ever heard of it?

    Not the context in your head, no.

    They can make stuff cheaper. Good.

    Do they actually make stuff using fewer resources and less energy or are their production standards lower and or artificially deflated. You know at least half of this to be true but, instead, you want to pretend that comparative advantage is going to disappear because one or more sides starts manipulating things *further*.

    It's as if Trump has managed to cause his supporters to forget everything they ever learned about economics.

    It's as if some libertarians like to pretend that if free people give copiously to communist dictatorships, they'll remain free.

  • sarcasmic||

    The context was an article about tariffs, prices going up, and the president talking about his protectionist policies causing production to move to the US.

    Do they actually make stuff using fewer resources and less energy...

    They sell stuff to us at a price that is lower than what it would cost if we were to make it here.

    you want to pretend that comparative advantage is going to disappear because one or more sides starts manipulating things *further*.

    That's about a retarded as when lc claims that opposition to Trump's tariffs equals defense of what was in place before he jacked them up.

    It's as if some libertarians like to pretend that ... they'll remain free.

    The federal government is a much greater threat to our freedom than China will ever be.

  • Brett Bellmore||

    "They sell stuff to us at a price that is lower than what it would cost if we were to make it here."

    OK, now let's ask, why?

    Our material and energy usage won't be higher. The essay concedes that labor costs are a tiny fraction of the difference. What's left?

    Basically, regulation, and the fact that we let the manufacturing slip away, and it would take time to rebuild the capacity to do it.

    Well, isn't reducing regulation a libertarian goal? And how short a time frame are we supposed to have?

    Being dependent on a hostile power for our manufacturing IS kind of a legitimate national security issue, I should think.

    Finally, consumers are also workers, and somewhat care if they have jobs to pay for their phones.

  • Last of the Shitlords||

    "The federal government is a much greater threat to our freedom than China will ever be."

    What a deluded, unrealistic statement. You must really live a soft, sheltered life to be that antagonistic to your own government versus China. They damn well are a major hreatto our long term freedom and liberty in ways you can't really imagine in that stunted mind of yours.

  • Shirley Knott||

    Do they actually make stuff using fewer resources and less energy or are their production standards lower and or artificially deflated.


    Who cares?
    If the products find willing buyers (w/o use of fraud) then what's the grievance?
    Complaining about China's "market dominance" is, frankly, silly. That they do things internally I might disapprove of (they do, and I do) is as relevant as whether a corporation hires people who say bad things about women, gays, blacks, or whatever. If it matters to you, that changes your purchase decision. If it it doesn't, it doesn't.
    Most of us are primarily interested in maximizing the return on our dollars spent. If some aren't, their purchase decisions will reflect that. With the side effect of them making fewer purchases because they've got less to spend, in aggregate..
    But nobody is just 'giving' China money. We're engaging in exchange, not charity.
    If you are concerned that the Chinese managed economy can outperform our less managed economy, well, 'check your premises.'

  • NotAnotherSkippy||

    Who cares?

    Umm, those of us actually trying to make consistent arguments? Cost is all about inputs. Does China have access to inputs at a different price than the US? For the most part the answer is no, therefore the costs shouldn't triple just because you need it to argue against tariffs. From the source article itself:

    And Apple pays around $5 per iPhone for labor.

    "It largely costs more for people to manufacture products in the U.S. because of higher labor costs," says Carl Howe, Vice President of data sciences at the Yankee Group. "Labor costs here are somewhere in the vicinity of two to three times what they're going to be in China."

    $15 = $1500 Right? That's how math works, isn't it?

    And much of the rest of the estimates comes from the efficiencies of clustering and the presumption that all sorts of "microshipments" would have to happen (presumably because it's impossible to plan a build schedule, because, um, reasons). But we all know that the laws of physics dictate that clustering can only happen on the other side of the date line. It is known.

    Mad.Casual's point is that manufacturing costs here are inflated because of OTHER government policies like those driven by an out-of-control EPA.

    If you are concerned that the Chinese managed economy can outperform our less managed economy, well, 'check your premises.'

    Indeed.

  • Last of the Shitlords||

    Better to just strip out regulations. Progtards love China, so therefore China's level of manufacturing regulation should be more than acceptable to them.

  • Trollificus||

    You are presupposing a commitment to logical consistency that progtards do not actually exhibit.

  • ||

    But nobody is just 'giving' China money. We're engaging in exchange, not charity.

    Unless you built your factory in Taiwan and China claimed ownership. Unless you built your factory in China because of explicit Chinese sympathies. Unless you built your factory in China under a given set of conditions or expectations and, when those conditions or expectations weren't met were told 'too bad'.

    If you are concerned that the Chinese managed economy can outperform our less managed economy, well, 'check your premises.'

    You keep repeating this like it explains something and when I and others have pointed out to you that it's a meaningless abstraction you consistently fail to rebut. The Spartans at Thermopylae were more familiar with the terrain, better armed, better trained, and free men. The inferior-equipped, servile army of God-king Xerxes marched over their corpses. Numbers can overcome freedom.

  • EscherEnigma||

    It's as if Trump has managed to cause his supporters to forget everything they ever learned about economics.


    Bold of you to assume that President Trump's supporters Americans ever learned much of anything about economics.

  • loveconstitution1789||

    Sarcasmic threw out bad numbers because he is economically illiterate.

  • sarcasmic||

    Monkey sees words like "economically illiterate" and repeats them back to the adults.

    *clap*

    Good monkey. You can repeat words. Too bad you lack the grey matter to comprehend them.

  • Nardz||

    "Monkey sees words like "economically illiterate" and repeats them back to the adults.

    *clap*

    Good monkey. You can repeat words. Too bad you lack the grey matter to comprehend them."

    This is the least self aware comment made on this site since the last thing Tony said

  • loveconstitution1789||

    See Sarcasmic get upset today. Same as the other day.

    Poor Sarcasmic babbles to himself.

  • Last of the Shitlords||

    And very obviously sheltered too. He should spend some time in the third world. And not in some pampered resort. He should see how real people live in these places.

  • ||

    On comparative advantage. A couple of years back the topic came up and I came across some essays that questioned it.

    Here's one:

    http://web.mit.edu/14.54/www/handouts/lecture3.pdf

  • ||

    some essays that questioned it.

    Here's one:

    With all due respect, the linked 'essay' answered questions about comparative advantage.

  • ||

    With all due respect, the linked 'essay' answered questions about comparative advantage.

    Technically, it just busted the myths that it asserted. It didn't even acknowledge the flaws or reasonable criticisms of comparative advantage.

    If your goal is to make as much shit as possible using as few resources as cheaply as possible, comparative advantage is great. If you also value ideas like personal independence, self-reliance, individualism, etc. comparative advantage has some pretty obvious tradeoffs.

  • Crazyotto||

    Perhaps that is why the Libertarian party can't/won't recognize that China is not our friend and is a fair trading partner. As much as I hate tariffs letting China get us by the short hairs is hardly the way I want to see the Republic end. I realize that the Libertarian party has be taken over by the George Soros Globalist party. I guess the Republic is over and same with my support of the so-called Libertarians

  • BambiB||

    An American-made iPhone would cost more than $2,000 at the retail level


    This is bullshit. It's the worst-case scenario for the leading edge of the industry.
    America, having been sold out by CEOs in their stampede to outsource jobs, has forfeited much of its production capacity - so investment in new plant will be required. That's how you get a "$2000" figure. But once the investment is made, the phones will cost (as cited in the article) about $10 more per phone. In the meantime, thousands of new jobs will be added to the economy. Those companies which outsourced may get hit in the teeth. Not sorry for them.
    Some years back a company that made tax software outsourced their product to India. They saved a buttload on the product coding. After patting themselves on the back for a year over their "brilliance" in releasing their programmers and hiring Indians, it was time for the software to be updated. The Indian's who had written the code could not be found. The documentation was scant at best. In the end, they had to start from scratch with a whole new group of programmers. It cost them more than they'd saved in the initial outsourcing.
    This is called "karma".
    I shed no tears for Apple or any other company that outsourced its plant and now has a tit caught in the wringer.

  • vek||

    Yup. The USA/Europe/Japan are still some of the largest manufacturers of various types of chips in the world. The fact that we are economically viable in making a LOT of types of chips in the current environment means we can't be too far off from being competitive in making ANY type of chip. It's a mostly automated process after all. So if the final assembly cost difference is only $10, then I doubt we'd have to raise the prices more than 10-20% to make 100% in the USA. Not that we'd need to do that anyway. There's nothing wrong with utilizing global supply chains, it's just that things have got a little out of hand about not being able to make virtually anything here anymore.

  • dpbisme||

    I would say that "Dear Leader" is not trying to get iPhones made in the UIS but instead open China to American Products and Services.

    I mean if you have been paying attention this is really about REAL free trade, meaning they open their markets to our products.

  • Last of the Shitlords||

    We can't have THAT! All the real free trade libertarians here insist we're far better off letting our trading partners keep their markets closed and steal our IP, as long as we can save an extra 5% off some cheap crap.

  • Fred G. Sanford||

    "Our" IP? It isn't YOURS. It belongs to private companies who choose to do business in countries like China.

  • Lester224||

    It would be more due to component ship costs but $3000 is an exaggeration. The problem is that it would take too long to set up the factories in the U.S. We've don't have enough capacity here to build the volumes needed. You'd have to wait 3 years for the next generation.

  • DJF||

    So you think that Communism has comparative advantage?

    It does help that Communism can steal land, deny workers the right to argue for higher wages, give their crony businesses the right to ignore laws, get subsidies, create a revolving door between communist officials and business boards of directors.

    Yeah, Communism is the best!!!!!!!!

  • Brett Bellmore||

    You forgot poisoning the land; That's the source of their advantage in mining rare earths. Nobody else does it because it's a dirty business, expensive to do if you are trying to avoid turning vast expanses of land into toxic wastelands.

    China is, as far as I can tell, pursuing a military strategy of making its future military foes economically dependent on it for key parts of the supply chain, so that it won't have to fight the wars with its military.

  • loveconstitution1789||

    Trump Says iPhones Will Get More Expensive. Actually, It's Going to Be Much Worse Than That.
    Building iPhones entirely in the U.S. would double or triple their retail prices. There's no way Apple is going to do that.

    I wonder when Reason writers will actually discuss what the numbers are for tariffs on final cost of products.

    TARIFFS- must build inside USA because of tariffs- building inside USA will double or triple retail prices

  • sarcasmic||

    Jesus you're stupid. It's all in the article. Tariffs are 25%. Trump says it will result in stuff being made in the US. Actual cost of making in US greater than 25%, so stuff probably won't be made in the US. Fucking retard.

  • Dizzle||

    Considering trump usually knows what he's doing with these things, I'd guess this is his setup to shine light on the ridiculously high production costs in this country. He can use this to springboard into things like how dumb prevailing wage is, or a mandated 15$/hr minimum wage, or any of the various tax, environmental, or bureaucratic regulations imposed on business in any of these high end manufacturing industries.

    This is just going to lead people to ask... "well why is it so expensive to make here?" labor and parts are more expensive here. "well why are those things so much more expensive here?" Because... See above

  • sarcasmic||

    This is just going to lead people to ask... "well why is it so expensive to make here?" labor and parts are more expensive here. "well why are those things so much more expensive here?" Because... See above

    According the resident Trumptards, the problem is not that it costs more here. The problem is that others can do it more cheaply because their governments don't force them to the same standards that ours does. The solution of course is not to make it cheaper to produce here. No. The solution is to pressure foreigners into adopting our standards, and/or use tariffs to raise the prices of their goods.

  • loveconstitution1789||

    Trump is trying to get attention on trade restrictions, regulations, and government mandates that costs Americans billions.

    As you say, all the the government requirements that artificially inflated prices by 25%+

  • Baron Von Weinermobile||

    You are unbelievably stupid. There is no way you can be this dumb.

  • Last of the Shitlords||

    He's not. LC is also correct. And before you start in on me, that statistical likelihood that your intellect exceeds mine is extremely low. So best you don't pursue that line of discussion any further.

  • Fred G. Sanford||

    Actually yes he is. His statement that the tariffs implemented by other countries "costs Americans billions" shows that. But then he supports Trump, and Trump actually thinks foreign governments pay the tariffs we implement.

  • perlchpr||

    It's not an all or nothing thing.

    A 25% tariff will exert pressure that will cause some portion of things to start being made in the US to avoid that tariff.

    It won't cause everything to suddenly be made in the US, but it will cause some manufacturing to move this direction.

    Whether or not that goal is worthwhile, or worth the price it costs, is orthogonal.

  • ||

    "or worth the price it costs, is orthogonal."

    You think you're better than us?

  • vek||

    Yup. There are actually LOTS of things that are currently made in China, or elsewhere, where the total cost savings once it hits US shores is less than 25%. The article itself states that labor is only an extra few bucks as far as final assembly goes. Something that doesn't have THE MOST COMPLICATED SUPPLY CHAIN IN THE WORLD like cutting edge electronics does can be shifted here far easier.

    For instance we're still one of the largest cotton producers in the world, we export most of the stuff to foreign nations, and mill very little of it stateside into cloth anymore... But a 25% tariff on clothing would probably produce crap tons of jobs, because much of that process is automated nowadays. Throw in a few extra bucks for labor for cut/sew, and all of a sudden you have jeans made in the USA again.

    The last few pairs of jeans I bought were actually still made in the USA actually... And cost LESS than Levi's do, and are better quality. So even a minor nudge in SOME product categories could shift a lot of stuff back here.

  • Last of the Shitlords||

    Levi's have been hit and miss for some time now in terms of durability.

  • Trollificus||

    Well, they're a "lifestyle brand" now, not a "denim-clothing-producing brand". And it's a diverse, viral, organic, hot trending demographic brand! A "committed to inclusion and equity" brand.

    All of which comes with a price premium. And, perhaps, a few quality compromises. A premium and compromises which only a white supremacist would be reluctant up with to put.

  • vek||

    If you don't want to just buy some American made stuff (I've bought Prison Blues (which are made by prisoners in Oregon, LOL, but pretty good.) and Texas Jean Co. Both are reasonably priced, not $200 trendy made in USA jeans like some dumb companies do. There are others too. ), the thing to look for with Levi's is WHERE IT'S MADE. As of the last time I looked they still produced most of their "classic" staple products like 501s in Mexico. These are actually decent quality still. The rest of their stuff is mostly made in Asia, all their trendy models or whatever. That stuff is mostly crap, although they may have accidentally made something decent there too.

  • loveconstitution1789||

    Look at Sarcasmic be wrong again. What a dipshit.

    iPhones just magically go up 25% in price at the store?

    Try reading dufus.

  • sarcasmic||

    I'm simply quoting your God Emperor. He's the one who said prices were about to go up. Try reading, dufus.

  • loveconstitution1789||

    By exactly 25% to the purchase price? Liar. He didnt say that.

    You dipshits and your lying. Here's what Trump did tweet.

    Donald J. Trump
    ‏Verified account @realDonaldTrump
    Apple prices may increase because of the massive Tariffs we may be imposing on China - but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting! #MAGA

  • sarcasmic||

    He didnt say that.

    Neither did I, retard.

  • loveconstitution1789||

    Yes, you did liar. The you butted into my question about final purchase price getting attention.

    Trump never mentioned 25% on the final purchase price.

    As usual, your gibberish word salad requires you to swing by again to justify the nonsense that you spout on a daily basis.

    Man, you are dumb angry drunk.

  • sarcasmic||

    As usual you double-down when you know you are wrong. What a retard.

  • loveconstitution1789||

    Very convincing gibberish goober.

    What is your favorite alcoholic drink when the spittle forms at the corner of your mouth and you are so angry?

  • Last of the Shitlords||

    Sarc, you are a loud mouthed, surly idiot. LC is kind enough to try and straighten you out, but you won't have it. This really showcases what happens at the intersection of stupidity, Ignoramce, and intractability.

    You should really just thank him for his generosity.

  • Agammamon||

    You mean that when we abandon comparative advantage in favor of protectionism and self sufficiency, that we become poorer

  • loveconstitution1789||

    I am a bot...

  • BambiB||

    Eventually, 25% tariffs will result in products being built in the US. Sure, there will be a leading edge cost to build plant. But once that's done, 25% will make the payments on plant and more.

  • Baron Von Weinermobile||

    So, coercing people through taxation (and thus threat of prison) to conduct business in a manner deemed socially beneficial by politicians and labor unions is a libertarian principal how exactly?

  • Last of the Shitlords||

    It is not. However, we are not starting from a trading structure that is in any way libertarian. And since our trading partners will not acquiesce to our requests for a more level international marketplace, we are left in a position where we can either lay down and take what we have now, or apply duress in hopes that they will, at least in part, relent.

    If they relent, we are that much closer to an international free market. So let's hope Trump's efforts are successful.

  • Crazyotto||

    Wow are you the new face of the Libertarian party? So articulate... so blissfully ignorant...Command and control economies are fabulous for overcoming competition

  • Agammamon||

    You mean that when we abandon comparative advantage in favor of protectionism and self sufficiency, that we become poorer

  • loveconstitution1789||

    I am a bot...

  • AlmightyJB||

    I'm sure the lefties won't mind paying more if it means closing down those sweat shops. Lol

  • Jerryskids||

    Yeah, I saw some piece of shit "economist" from the Trump administration on one of the news-talk shows touting the increased manufacturing jobs we're seeing as a result of tariffs making our factories more competitive and the TV airhead was too ignorant or too sycophantic to bring up the subject of the Broken Window Fallacy, of the Seen and the Unseen. And then of course he mentioned the mythical "multiplier effect" of this domestic production, as if the US dollars sent to foreign countries and the US dollars saved by consumers by buying cheaper foreign goods somehow get flushed down the toilet or something rather than finding their way into the US economy.

  • vek||

    Are you really that dumb?

    I'm not arguing about efficiencies or anything else... But the multiplier effect IS a real thing. If $1,000 is earned here, and spent into the local economy by a US citizen, all that money stays here, and is generally spent around the economy several times. If a foreign citizen gets that $1,000, even if they invest it here, that $1,000 AND any profit earned off of whatever investment is NOT owned by a US citizen. In other words US citizens have LESS money in their bank accounts.

    That is simple math, and simple reality. You're basically making the argument that it doesn't matter if YOU own your house, or if your landlord owns the house you live in. Obviously you are wealthier if YOU own your own house, instead of paying somebody else to rent it. This is essentially what foreign investment amounts to. You may have access to the assets owned by a foreign investor, but you're paying rental fees to use them, versus just owning them outright.

    This idiotic sentiment on the part of some libertarians is what frustrates me possibly more than anything. WHO owns assets is a very important thing. All those dollars may come back home in one form or another, but the fact that they're not assets owned by US citizens makes a BIG difference for the economic well being of US citizens.

  • Magnitogorsk||

    "they won't be available to the single mother who uses it to FaceTime with her kids"

    The cash-strapped single mother would be wise to not use one of the most expensive phones on the market, with or without the tariffs

  • AlmightyJB||

    We'll the government just needs to buy it for her. Owning an IPhone is a right.

  • Red Tony||

    This comment was made better by the typos.

  • Dizzle||

    When the occupy movement was a thing i visited occupy Pittsburgh for myself to see how truly stupid the people were. My focus was on how many railed against corporate profits but had I phones in their pocket. My god, the drool that ran out of their slackjaws when i asked them how they could support a company with both the largest margins on their products, and the largest market cap of any company in the field. Then you tell them exxon, on their pretty sign, operated on (at that time) a 10% profit margin and apple operated on a 60% one and their brains began melting out their noses.

  • loveconstitution1789||

    The people get their narrative and refuse to question it.

    It makes them "useful idiots" indeed.

  • Baron Von Weinermobile||

    You literally just described Trump supporters as well.

  • Last of the Shitlords||

    The dumbest Trump supporter is smarter than you are capable of imagining.

  • Scarecrow Repair & Chippering||

    Yeah, make them in America, sure. With what workers? Record unemployment, right? What will those new workers stop making now to become tomorrow's Apple employees?

    What a fucking economically illiterate dunce. Hell, it's not even economics, it's ordinary common sense. Where are those new workers coming from, and what were they making that won't be made when they start making Apple products?

    Fucking moron.

  • Scarecrow Repair & Chippering||

    The answer is, they will stop making whatever it is that Americans can no longer buy because everything else got so expensive with the tariffs. $2000 iPhone, there's $1000 that won't be spent on something else, so there's where those workers will come from. Oh wait, $2000, dang that's high, how many people will stop buying iPhones? Guess all those workers can go back to the unemployment lines. Herp derr, it's all fucked up.

  • ||

    Because that's how economics works, zero sums. A job gained here is a job lost there. The answer is that a generation of feckless baristas with degrees in gender studies might have to find something to do other than serve coffee, tag along on their parent's insurance, and live out of their basement.

    Hopefully, people like Sabrina Erdely and Anita Sarkeesian can find a job scrubbing out coke ovens or something. I'm sure they'll take comfort in the job as long as they're equally paid and represented.

  • Ann NY||

    "The answer is that a generation of feckless baristas with degrees in gender studies might have to find something to do other than serve coffee, tag along on their parent's insurance, and live out of their basement."

    Then who will make our coffee?

  • RoyMo||

    Machines?

  • perlchpr||

    Where are those new workers coming from[?]

    Mexico?

  • ||

    Nunavut?

    Iglatikuk (shakes iPhone): I can't seem to get this iPhone to work.
    Floor manager: Try removing your mittens Iggy!

    /hardy laughs all-around.

  • NotAnotherSkippy||

    Great, now how about the 3% we lost from the labfor?

    But more tellingly, if Apple only has about $5 in labor cost making a phone in china, just how much labor do you think is really involved in the process? (Hint: Chinese wages are a lot higher than $1/day).

  • Last of the Shitlords||

    To,hear the progtards tell the story, workers are marched in to the Foxxcon plant in chains by ar,Ed Chinese army troops who shoot anyone who tries to take a break.

  • vek||

    What workers Scarecrow?

    Well, despite the fact that Trump likes to talk up his unemployment numbers, they're fake just like they were when Obama was in office. We still have over 10 million fewer people working than we did pre great recession if you want to talk labor force participation rates.

    So there's your workers. Next question?

  • damikesc||

    Adding 25 percent to the cost of a new iPhone will hike the price of Apple's low-end product to more than $200

    I hope you mean BY more than $200, not TO more than $200.

    IPhones are, literally, never $200.

    New ones start in the $700 area and go high as $1150.

  • sarcasmic||

    Actually you can get older models for $200 or less. Brand new even.

  • damikesc||

    Given as somebody who works at a major cell service --- our IPhone SE models retail for $350. And since most carriers no longer do contracts, you don't get any price subsidy. You're paying retail over 24 or so months traditionally.

  • sarcasmic||

    Consumer Cellular is a lot cheaper.

  • loveconstitution1789||

    He's quoting the 64GB iPhone 8. The 256GB iPhone 8 is $350.

  • Agammamon||

    You mean that when we abandon comparative advantage in favor of protectionism and self sufficiency, that we become poorer

  • loveconstitution1789||

    Are you a bot? You posted that exact thing down thread.

  • Earth Skeptic||

    Look, for every Trump who thinks trade is a zero sum contest that must be won and is fundamentally wrong about tariffs, there are 200 million voters who think that all commerce and finance are zero sum and are fundamentally wrong about everything economic.

    Seems fair and balanced to me.

  • Ken Shultz||

    Double or triple the price?

    If smart phones haven't become a commodity already, that's where they're headed and soon. I bought the first smart phone model. The last one I bought, I got brand new and unlocked for $179. I moved to a plan that gives me unlimited talk, text, and 3G data for $15 a month. The trend towards that base line will likely continue (through automation or otherwise) regardless of where smart phones were made.

    The important question for me is whether this kind of interference in the economy will delay the arrival of whatever the next revolutionary product will be. I don't know whether what comes after the singularity is Skynet or paradise, but I want to live long enough to see that transformation myself. My grandparents were born in the days of horse and buggy. They lived long enough to fly to China on a commercial airline. I want to see that kind of revolutionary change in my lifetime--and interference in the innovation machine delays revolutionary change.

  • Brian||

    It could.

    Price points for devices like phones are well understood and a lot more sensitive than people might assume. For example, something happens to customers psychologically when a price goes to $300 from $275, that doesn't happen when you go to $275 to $250.

    It's easy for new hardware gizmos on a phone to add up and push the price into "Maybe someday, but not right now."

    Anything like taxes, regulations, etc, that increase price go into that. And, unlike what a lot of lefties think, there really isn't really tons of room in the CEO pay to make it up.

    So, yeah: stuff like this could mean everyone has dumber phones longer.

  • damikesc||

    As a depressing heads up, as 5G is becoming a thing --- 3G is going to go away. In fact, at my employer, more than a few 4G phones can no longer even be activated because they use too much 3G service. Samsung Galaxy S4 are one of the more well-known devices that, hey, you cannot put on a number any longer.

    If you got it there already, you keep it. But to go from a phone TO an S4 --- that is not an option here.

  • Ken Shultz||

    When 5G becomes a big thing in the future, aren't we likely to see 4G take 3G's place as the low budget alternative?

    One of the points I was trying to make was that at $15 a month, how expensive can the hardware get? My phone was unlocked, but if I were paying $15 a month for service, how much can they add on to finance an expensive smart phone?

    When I do a market analysis, I start with a two questions: 1) How much are people paying to buy? 2) How much are people paying to rent?

    I'm willing to pay $179 dollars down + $15 a month in rent. That's my data point contribution to the market. I use my phone for data, text, and voice. The 5G devices of the future may do those things qualitatively better, but what are they doing new? And most of my data comes across WiFi anyway! To get me to upgrade to 5G, they'll need to offer me a device that fits under my up-front costs + rent.

    I think they're running out of qualitative improvements that can justify paying a premium, and there's a word for things that can't differentiate themselves on quality--so they have to compete primarily on price.

    They're called "commodities". Isn't that where smart phones are headed?

  • Weigel's Cock Ring||

    People should stop throwing their good money away on crap they don't really need anyway, and we should go back to actually fixing shit that's broken instead of needlessly throwing it away and replacing it with a new one, like we did when we had a lot more sense. Anyone who immediately rushes out to spend hundreds of dollars on the newest version of the iPhone for the one or two new features it has is just a God-damned fool.

    Save your money kids, because the country will be bankrupt much sooner than you realize and the welfare won't be around to save you.

  • Leo Kovalensky II||

    Save your money kids, because the country will be bankrupt much sooner than you realize and the welfare won't be around to save you.

    What good would the money be in this scenario? Wouldn't we be better off holding, say, iPhones?

  • Fairbanks||

    A bigger fool is someone who thinks they know what's best for other people.

  • loveconstitution1789||

    Its a tip for success.

    Spend less and make more will allow you to have more wealth.

  • Agammamon||

    You mean that when we abandon comparative advantage in favor of protectionism and self sufficiency, that we become poorer

  • loveconstitution1789||

    If the end goal was protectionism, which it is not.

    Trump wants to get the USA closer to free trade as possible. Since that has already been turned down by our trading partners, Trump wants to get lower trade restrictions than when he took office.

  • Baron Von Weinermobile||

    You keep using this term "We" as if it has some meaning. Perhaps you should worry about how best to spend your own money and not tell other people how they should live.

  • Tom Bombadil||

    Wait.

    I $600 iphone tariffed at 25% would increase it to $750 to the consumer.

    Why would Apple then decide to produce the entire phone in the USA at a price to the consumer of $2000.

    Am I missing something?

  • Tom Bombadil||

    Also:

    "Froman: "We can make iPhones in this country, completely in this country, but they'll probably cost $3,000 and they won't be available to the single mother who uses it to FaceTime with her kids "

    1. I don't believe this $3000 statement.

    2. Why will the expensive iphones not be available to single mothers? Sexist policies at Apple? Due to shortages, only important people (men) will be allowed to buy them?

  • Red Rocks White Privilege||

    "Your mom's digital umbilicus will cost $3000 if we have to make them in the US!!" is pure scaremongering. Supposedly, the actual production cost of an iPhone X is about $400, meaning Apple's already making a profit of $600 for every one of those things sold. I'd love to see the math that shows where this supposed $3,000 cost is coming from.

    Technology is theoretically supposed to get cheaper over time as inventories of scale and improvements kick in. If the only reason that we can now buy a laptop that's 1000X more powerful and costs $2000 less on an inflation-adjusted basis than one in the 80s, is because these companies have to rely on $0.23/hr labor with suicide nets outside the factories, rather than actual economies of scale, then don't be surprised when these companies get targeted for various regulations.

  • vek||

    It is a total nonsense number. Even if you stick with the "completely in this country" number it's BS.

    The US/Europe/Japan still produce TONS of memory, and chips of all assortment. They're price competitive IN the global market as is. It's just that we don't happen to produce EVERY chip the iPhone uses because supply chains for that stuff moved to Asia when we decided to move assembly there to cut labor costs, back when their wages were lower, and things were less automated. If we started producing every chip the iPhone needed stateside, I doubt it would bump costs 25% because it is an almost 100% automated process.

    Fear mongering nonsense is all that is.

    We shipped millions of jobs offshore to often times save a mere dozen or two percent on final costs once they hit the shores of the USA. You can tell this for many products by looking at ones made in the USA, like say Anchor Hocking glass products, and comparing to the Chinese made Libby brand that costs the exact same amount. There's no reason Libby couldn't make stuff here obviously, since Anchor does, but they make their stuff in China. They may have better margins because of doing that, or who knows what. But whatever the case is, the difference is negligible. The same is true for a LOT of products that are made overseas.

  • Brett Bellmore||

    Most of the difference in manufacturing cost is due to manufacturing capacity. China had a significant, but not huge, advantage in manufacturing costs, due to low wages and lack of environmental regulations, and this caused manufacturing to shift in their direction over time.

    So now they've got the manufacturing capacity, we don't, and if you SUDDENLY shift production here, the price goes through the roof.

    OTOH, if you reduce their price advantage a bit, level some of the regulatory burden, manufacturing can start shifting back, especially since we're originating the technology to begin with. And, eventually, not immediately, it will stop making sense to design stuff in the US, have it made on the other side of the planet, and ship it here.

  • loveconstitution1789||

    +1

  • Red Rocks White Privilege||

    Yeah, but that would require patience and long-term vision, and there are elections to win.

  • vek||

    All true. We lost the supply chain when we subbed out assembly on lots of things. We're still competitive in growing cotton, and making textiles out of it too because it's almost totally automated... But since we don't cut and sew clothes here much anymore, which is the labor intensive part of making clothes, all that down stream stuff we're actually awesome at moved over there too.

    As automation has improved, and Asian wages have risen, stuff has been trickling back this direction... This will probably continue even with no major changes, but if we deregulated more, or put other incentives in place, some industries that are right on the edge of being viable here already would probably pour back in rapidly.

  • Intelligent Mr Toad||

    Isn't Trump saying that the goal is to spook China into agreeing to have both sides cancel tariffs altogether? If yes, that's a good thing.

  • EscherEnigma||

    That's one of the "3D Chess-master" arguments, yes.

    'course, some sort of unilateral disarmament wouldn't "bring back" any factory jobs, as absent meddling from the American side of things it will still be cheaper to build that stuff in China. So if you believe the "it's all a bluff to make China drop tariffs" argument, you have to believe that President Trump's stated "bring back factory jobs" goal is a lie, and any company that actually takes him at his word will actually be worse-off in the end.

  • Brett Bellmore||

    They can't actually make stuff cheaper where quality is important, without major assistance from foreigners. Basically Apple builds a plant in China, and China supplies the slave labor and lack of intrusive regulation, but Apple supplies the complicated stuff.

    Then China steals the IP, but Apple seems not to care, because they make their money selling to Americans stupid enough to pay a 60% markup, knockoff IPads in China don't hit their bottom line.

    Notice that Tesla is building a battery factory in China, (Because China won't let them sell Teslas there otherwise.) it isn't China building the battery factory.

    Aside from the slave labor, and lack of environmental regulations, there isn't really a lot of inherent advantage in manufacturing in China.

  • vek||

    That's actually not entirely accurate...

    If we open up trade with China, but they finally do the same for us too, we WOULD bring more factor jobs back. They already have access to us... But if we gained access to their market, I would bet my ass we'd export maybe an extra couple hundred billion dollars a year in products. So while our iPhones might still be made there, without their outrageous tariffs on cars we may be shipping over a lot more Corvettes, Tahoes, Cadillacs, Mustangs, etc. We might also export more agri products or whatever.

    So if we got to bilateral 0% tariffs, Trump would still be fulfilling his promise. I think 99% of people that support him in this stuff get that. Nobody is expecting him to just straight black ball China and bring 100% of manufacturing back here, that's just what idiots think Trump supporters think...

  • Last of the Shitlords||

    Very true. I don't think many Trump supporters have an xpactation all trade barriers will drop. Most people are smart enough to understand we will lower some barriers, but others will remain.

  • RoyMo||

    Of course Trump may be overestimating Xi's intelligence. But if Xiis a dumb as he is starting to look it may suddenly get very expensive to only be able to make stuff in China, so maybe it is a wash.

  • Juice||

    "Make your products in the United States instead of China," he tweeted this weekend. "Start building new plants now."

    There's a word for this sort of talk.

  • Rev. Arthur L. Kirkland||

    "Crazytown," according to one senior official in the Trump administration.

  • Last of the Shitlords||

    Bitch, I'll let you know when you're needed. Now back in your cage.

  • Ben_||

    And that's Reason's Panic of the Day.

    Tune in tomorrow to find out the latest thing you didn't know you should be panicked over.

  • Hamster of Doom||

    You know what I like to do? Play video games, cook and eat savory meats, make jokes that only I laugh at. Another thing I like to do is mentally scratch out the word 'tariffs' and use 'taxes' instead.

  • ||

    So, a big caveat in all of this that Reason maybe, kinda sorta glosses over (not intended to be an indictment) is Trump's lukewarm stance a one China policy. A majority chunk of $$$ in the comparison provided is from Taiwan (Foxconn) rather than China. Not to suggest Trump is playing N-dimensional chess, just that a stronger independent Taiwan/divided China could be a bit of a silver lining.

  • Dizzle||

    The first leader trump met after inauguration was Taiwan, wasn't it? If not she was very early.

    This is the thing with trump. He DOES play these games. I'd have hoped by now the stark difference between what he says and what actually happens would have tipped people off to his schtick, but so many stooges still hang on his every Word. Every move the man makes in public is to apply leverage somewhere. He's never not playing the game. Bringing Taiwan closer to us is just a lil part of his china game plan, along with tariffs, meetings, shooting missles at Syria while dining with xi, forcing them to help woth north Korea, etc, etc.

  • ||

    I wouldn't go that far. I would say that, once again, the status quo with China was repetitively and demonstrably not working and that Trump is not status quo.

  • loveconstitution1789||

    +1 and what Trump haters will never understand.

    To believe them, everything good that has happened to America/Americans since Trump became president was 100% random.

    Trump is playing the game for America and Americans against the international Socialists.

  • Baron Von Weinermobile||

    Trump is an international Socialist. He is just too stupid to realize it. Every argument that he and his supporters make is rooted in the socialist labor theory of value.

  • ||

    Trump is an international Socialist. He is just too stupid to realize it.

    Still preferable to the 'socialists and they know it'.

  • Longtobefree||

    So an incredibly expensive product goes to an outrageously expensive product. Where's the problem?
    There are lots and lots of functional devices that can text, talk, and surf. People don't buy an Apple phone for any reason other than conspicuous consumption. So the price increase should actually increase sales; more 'look at me, I'm rich' factor, and a middle finger to Trump. How can they lose?

  • Leo Kovalensky II||

    You don't need multiple brands of [insert product].

    Where have I heard this line of thinking before??

  • Shirley Knott||

    "The only reason"??
    User experience counts for a lot. I'd rather have an iPhone than my Android phone, and it's all down to quality of user experience, across the board. Currently, the delta in price keeps me on Android. It's usable, but it's frustrating, whereas my iPhones, and iPads, have largely been a joy to use.
    Wish I could afford too cross that divide, and it's nothing to do with 'conspicuous consumption'.

  • sarcasmic||

    Check out Consumer Cellular. You can get an older iPhone model for under two hundred bucks.

  • Shirley Knott||

    It's not just the cost of the phone, though — it's also the service plan.
    My Android phone was $80 and service is usage based only, not monthly regardless of usage, or with usage caps and excess usage fees.
    I'm sure I'll be able to make the transition again at some point.
    My major complaint is the nonsense that the *only* reason people buy iPhones is conspicuous consumption. Android and iOS are roughly checklist similar, but user experience is light years apart. Apple is much, much better — in a personal and subjective way, of course ;-)

  • vek||

    So says you! I've always despised Apple products. They've always been designed around the lowest common denominator factor. As a geek and a power user, they limit the stuff that people who know what they're doing can do with their products. I get MORE functionality out of my Android because I can customize it far more than an iPhone. In short they're overly simplified so that grandma can figure it out.

    That's nice for grandma, but it irritates the hell out of a dork like me! Between that and their price gauging, I just can't stomach their products.

  • Last of the Shitlords||

    That's the trade off, isn't it? An ultra stable platform with ease of use, versus a less stable platform that allows for far greater user customization.

    I jjust wish we had more than two choices. Microsoft gave up, amd BlackBerry is largely tits up anymore.

  • Agammamon||

    So an incredibly expensive product goes to an outrageously expensive product. Where's the problem?

    The problem is we're going to see an increase in price for these items - without seeing any offsetting gain elsewhere.

    We're being made poorer.

  • loveconstitution1789||

    We were already poorer with pre-Trump trade restrictions.

    Getting some of those trade restrictions off Americans seems like a plan worth trying for 12 months.

  • Rev. Arthur L. Kirkland||

    What's this "we" crap?

    Modern, successful, educated, accomplished, skilled Americans have been anything but poorer for a long time.

  • loveconstitution1789||

    You're so dumb, you dont think Clinton, Booosh, and Obama regulation made you poorer than you would otherwise.

  • Last of the Shitlords||

    Arty is unable to see past his progtarded screel. If there is ever a Reason convention, I would love to meet him. The groveling alone would make it all worthwhile.

  • vek||

    Actually, that's not how the math pencils out my friend...

    If the price increases, but we DO shift manufacturing back to the USA, then there is all of THAT offsetting gain.

    Just as when we outsourced manufacturing millions of people were hurt by that, and millions of others gained, the same would happen in reverse. And it's not JUST a single factory job gained either. That single factory job brought back would leave that guy now spending more money into his local economy, the national economy, creating more jobs, and paying more in taxes.

    Now, whether or not that gain offsets the loses is hard to say. But it's not NO gain like some people like to pretend.

    Personally, going by the math, I think there are some products that are a net gain to the economy to make abroad, and some that aren't. A product where we save only 20% on costs by outsourcing is probably a net loss to the US economy because of the recirculating effect, because that small savings cannot possibly make up for the business activity/wages/tax revenue lost. Whereas a product where we save 70% by offshoring certainly is a net boon to the US economy. Pretending that BOTH cases aren't possible is mathematically illiterate IMO.

  • Baron Von Weinermobile||

    It's not the government's job or right to worry about the economy. I can't believe I should have to state that on a libertarian site. In fact, there is no such thing as the economy, only individuals. Once you start looking at the activity of 300 million people and start seeing it as a single unit called the economy, rather than simply the actions of 300 million individuals, then you have tacitly accepted socialism.

  • Last of the Shitlords||

    No, you haven't. And who is going to negotiate with foreign governments on trade? Which is a necessity. You can cal,that socialism, but that's the way the world works. Nations have trade deals with other nations.

  • vek||

    You can take libertarianism individualism to the point of absolute theoretical madness... But most people can realize that in the real world, as it actually exists, SOME forms of "collective" interdependence DO exist.

    It is a FACT that as a US citizen, your economic well being DIRECTLY depends on the economic well being of OTHER American citizens MORE than it does on the economic well beings of other nations citizens. Them having more money equals more money to spend on whatever products/services you or your company offer. Unless you happen to be the fraction of 1% of the US population (I would assume) that earns 100% of their income from abroad, you are tied to your fellow citizens, like it or not. Even if you DID earn 100% of your income from foreigners, you're STILL tied via taxes, laws, trade agreements etc.

    You're talking about things in a theoretical world that DOES NOT EXIST. Most people realize that if the US economy has more jobs, at higher pay, and more taxes being paid, that leaves them better off. That's basically all I'm saying.

    I won't even say you're WRONG on a theoretical level... But on the practical, real world level, you're being extremely naive. So yeah, I live in reality and not fantasy land. If you want to make fun of me for not living in Never Land, that's fine.

  • jdd6y||

    I'm pretty sure the author of the relied upon studies never took a microeconomics class. Currently, there is a market clearing price for the I-Phone. That is not going to change just because its costs go up. Apple would have to eat the tariffs. I don't know what the margin on those phones are but it is substantial. I doubt that the costs would go up so high that the margin would go negative - forcing the price up. So, while some consumers might be willing to shift their preferences because of "tariffs" -- that probably isn't the case. The price would stay the same and the margins would go way down. And likely require a significant investment in a highly-automated plant. Or moving the assembly to a country with a trade agreement with the US, i.e., Mexico and have the parts shipped there. There might still be a tariff impact on the cost of the raw materials but, again, what's the margin on these phones? 60%? 80%? You pay for the brand (i.e., feelings) not the components.

  • Agammamon||

    If the market clearing price does not change, then increasing the costs of providing iPhones means that iPhones will just disappear. They won't be available at any cost.

    I don't know what the margin on those phones are but it is substantial.

    Exactly - you don't know anything. You've *heard*, from other people who don't know anything, who are repeating something that someone else who doesn't know anything spouted off because 'of course it has to be this way'.

  • loveconstitution1789||

    You mean that when we abandon comparative advantage in favor of protectionism and self sufficiency, that we become poorer

  • Last of the Shitlords||

    "Exactly - you don't know anything. You've *heard*, from other people who don't know anything, who are repeating something that someone else who doesn't know anything spouted off because 'of course it has to be this way'."

    WTF are you talking about? You're the one who obviously knows nothing. iPhone margins ARE substantial. As are margins on most Apple products. This is common knowledge within the industry, amd also easily accessible information, as Apple is a publicly traded company.

  • Agammamon||

    Also, you're not using 'market clearing price' correctly.

    In economics, market clearing is the process by which, in an economic market, the supply of whatever is traded is equated to the demand, so that there is no leftover supply or demand.

    https://en.wikipedia.org/wiki/Market_clearing

  • loveconstitution1789||

    You mean that when we abandon comparative advantage in favor of protectionism and self sufficiency, that we become poorer

  • Dillinger||

    how 'bout you go one article w/o use of "actually"

  • mtrueman||

    You can manufacture your own raspberry pi phone for around fifty dollars. You can do it in China, America, or any other country that suits your fancy.

  • EscherEnigma||

    Theoretically, sure.

    Most folks won't be able to pull it off.

    It's the same thing as plumbing, really.

    Theoretically, there is nothing a plumber does that you can't do yourself with a little reading and some tools. The reality is that a nice chunk of a plumber's business is fixing things after someone tried to implement that theory.

    Though in the case of phones, the end result is likely to be that instead of paying either the market price for a phone or $50 for a pi-phone, you end up paying market price + $50 for your new phone and a box of useless parts.

  • mtrueman||

    According to raspberry, you should be able to buy them for around fifty dollars, no assembly required. My raspberry pi computer cost me thirty five, if memory serves, and it works fine. Almost double once you take cables, memory and peripherals like keyboards and mouse into account.

  • Brett Bellmore||

    Yeah, I'm kind of fortunate that I'm an engineer who grew up with relatives in the building trades. You wouldn't believe how much money you can save when you know how to do all the work yourself.

    But a declining fraction of the population seems to have that sort of competence.

  • Last of the Shitlords||

    Some of us have little aptitude for carpentry.

  • Rev. Arthur L. Kirkland||

    Smart or even just hopeful companies are likely to play rope-a-dope while Trump flails, waiting for the protectionist yahoos to be distanced from the levers of trade control in the United States within a few years.

  • loveconstitution1789||

    MAGA

  • Rev. Arthur L. Kirkland||

    Perhaps successful Americans will pay more for iPhones and other tariff-affected goods and lay off Trump supporters to offset the higher taxes.

  • loveconstitution1789||

    MAGA!

  • Rev. Arthur L. Kirkland||

    America is great, and has become greater during my lifetime.

    Every tariff-induced layoff of a Trump voter, and every tariff-precipitated bankruptcy or diminution of a business owned by a Trump supporter, would constitute a small victory for justice and accountability in America . . . and another part of America's greatness.

    Carry on, clingers.

  • Red Rocks White Privilege||

    America is great, and has become greater during my lifetime.

    Just don't ask Arthur L. Hicklib to remember any of it outside his own solipsistic bubble.

  • M.L.||

    "Cheap Chinese labor, contrary to popular opinion, is not the source of most of the savings achieved by building iPhones in China. Apple pays about $5 per iPhone in labor costs, but building phones in the U.S. would add only about $10 to that total. The real problem with trying to make an all-American iPhone is that cell phone components and parts are sourced all around the world. The pieces that go into an iPhone cost Apple about $190 to puchase, but would easily cost three times as much to produce in the U.S."

    So the higher wages to produce iPhones here are NOT the problem. The problem is our environmental and other regulations driving up all of the other costs. That makes Trump's goal seem more doable.

    On the other hand, this Reason analysis is probably bunk and ignoring the labor costs baked into all of the "parts."

  • vek||

    Of course. They seem to more or less be talking about final assembly costs there. But here's the thing, the components are largely made NOT in China already. I believe the new iPhones still have Corning Gorilla Glass that is made in the USA already. Probably lots of Taiwanese, Korean, and Japanese components. And Yes Chinese too.

    But if final assembly was switched to the USA, that would cost next to nothing. Even if SOME of the Chinese components were hit with tariffs, they could either be subbed for parts from the USA, Europe, Japan, etc OR simply pay the tariffs on those components alone.

    The whole it'll be $3000 dollars thing is nonsense grandstanding, because NOBODY is proposing that. But I would suspect that even that is bullshit. The cost differentials are simply not that huge in electronics. We do still produce lots of memory, other chips, etc in the US and Europe, and they're obviously competitive in the market as is. If we started producing slightly different chips, I see no reason they wouldn't be close too. It's just BS hype numbers on their part.

  • M.L.||

    Right. So Apple ships assembly to China because it can save $5 per phone. They don't care about American manufacturing jobs -- OK, fine, they're about making money.

    The US government on the other hand, should care about American manufacturing, both for nat sec reasons and just the general welfare of Americans. And trade policy should reflect nothing but those concerns.

    But the useful idiots shriek about absolute GDP and the profits of multinational corps, while studiously avoiding any mention of the distributional effects on the American people or GDP per capita. Same story on immigration. All while smugly pretending that their position is basic economics and their opponents are dumb as rocks. Idiots!!!

  • vek||

    That's all about right. The US government should care about trade policy, and whatever other regulations stifle business here. I Genuinely believe a lot of US and European politicians put in restrictions on purpose to "help out" the developing world. Countless globalists openly talk about how our standard of living is too high, and how others need to come up, as we go down some. These policies have done just that... So taking them at their own word, it seems reasonable they did a lot of this on purpose.

  • Sigivald||

    Also note that tariffs on imported goods are on the gross price paid by the importer; Apple will pay 25% on what it pays Foxconn/whoever for the phones.

    They don't pay tariff on their retail price.

    To keep the same margin, they don't need to raise retail prices by 25%. Apple's margins aren't public, but the non-R&D margin is reputed to be over 50% on e.g. the iPhone X.

    Call it $499 for a $1k phone, as the gross. Add $125 for a 25% tariff.

    So the price goes up by 1/8, not 1/4, to keep the same dollar amount margin; Apple might in principle decide to eat some margin and keep prices the same.

    (Of course, er, most of their competitors are also subject to the same tariff, aren't they? At least a lot of the Samsungs are made in China, though they have a wide factory network.)

    (Trade wars and tariffs are stupid and awful policy. But we need to take care to report their effects correctly and accurately.)

  • UnrepentantCurmudgeon||

    "if Bob Woodward's new book is to be believed"

    Well, so much for that line of thought. I wouldn't believe Bob Woodward if he announced that tomorrow will be Tuesday

  • CE||

    That's not how it works. If Apple could sell phones for 2 or 3 times the current price, they would already be doing it.

  • vek||

    They could very easily do that... Except

    1. All their competitors aren't hit by the tariff in that scenario, like they would be now, so the value proposition changes if they're the only ones doing it. If prices for everybody go up, the relative value relationship between them and their competitors stays the same.

    2. They would sell PLENTY at $2K a pop... Apple fanbois are morons! But they'd sell a lot fewer. They obviously think the current price point maximizes profits.

  • Pogue Mahon||

    The cost of MY iPhone won't go up, I live in Europe. But you Americans go ahead and shoot yourselves in the foot. MAGA

  • Brett Bellmore||

    In the short run we shoot ourselves in the foot. In the long run you wake up and find that China has you by the short and curlys.

    You know, kind of like letting yourself become dependent on Russian energy exports, instead of permitting extraction of your own resources?

    International trade has efficiency advantages, but they come at a huge price in vulnerability to hostile regimes. We learned that from OPEC, seems like you skipped the class.

  • Baron Von Weinermobile||

    This is a fallacious argument. In advanced countries manufacturing can be ramped up very quickly in response to a primary trading partner becoming hostile. Europe could very easily alleviate itself from dependence on Russian oil if it allowed fracking.

  • Brett Bellmore||

    But they don't, do they?

    And if Russia shut off the pipelines just as winter started, they'd be in a world of hurt. That they might be able to compensate in a few years wouldn't keep people from freezing.

    So the threat is real, and influences their policies.

  • vek||

    Reusing some of this from above:

    Here's the thing, the components are largely made NOT in China already. I believe the new iPhones still have Corning Gorilla Glass that is made in the USA already, likely other US parts as well. Probably lots of Taiwanese, Korean, and Japanese components too. And yes Chinese too.

    But if final assembly was switched to the USA, that would cost next to nothing. Even if SOME of the Chinese components were hit with tariffs, they could either be subbed for parts from the USA, Europe, Japan, etc OR simply pay the tariffs on those components alone, which would be FAR less than the total part costs.

    Motorola started assembling a couple of their phones in the USA before they got bought out by a Chinese company, who then promptly started making everything in China, and they didn't cost anything more than any other comparable phone. This was with global components of course. Samsung does the same in Korea STILL, which has wages closer to ours than China.

    The whole it'll be $2-3000 dollars thing is nonsense grandstanding, because NOBODY is proposing every single component be made in USA tomorrow. But I would suspect that even that number is bullshit if we did do that. The cost differentials are simply not that huge in electronic components manufacturing because it's mostly automated processes.

  • vek||

    We do still produce lots of memory, other chips, etc in the US/Europe/Japan, and they're obviously competitive in the market as is, despite our higher wages. If we started producing slightly different chips that we don't currently, I see no reason they wouldn't be competitive too. It's just BS hype numbers on their part. In truth what they mean is that prices would MAYBE rise a couple dozen percent, but it would take time to rejigger the supply chains and setup the manufacturing.

    We largely moved chip fabrication to Asia BECAUSE assembly was being done there to get low wages on the labor intensive parts. Now that we lost assembly, even though wage gaps have narrowed a TON since then and automation reduced labor input, fab has remained there. It's a chicken and egg problem that we're now mostly on the wrong side of.

    As I mention in a post above about jeans, the cost differential after shipping on MANY goods is VERY small. It's often only 10-20% savings to make things overseas versus in the USA for the US market. You can buy American made jeans for less than Levi's made in China online all day long from numerous companies.

    The fact is that that dozen or two percent savings has been enough for big business to ship manufacturing overseas. Once we lost the infrastructure to produce, it is hard to get it back. The supply chain has shifted mostly to Asia from America/Europe, but that doesn't mean we couldn't be VERY competitive again if there was incentive to do so.

  • vek||

    Then there's the fact that this WHOLE THING is really just Trump squeezing China to get them to make concessions in the first place. None of this is going to tank our economy, it's just not enough money to send us into a depression or anything. Not to mention that we can always just import lots of this stuff from India, Vietnam, etc to skirt tariffs anyway.

    But he's just twisting their arm anyway. People who are seriously worried this will have some massive impact are retarded. We will either end up getting concessions from China, which will be a POSITIVE thing for our economy, or we'll be stuck with some tariffs that MIGHT raise SOME prices 25%. Either way it's not an apocalyptic scenario.

  • MoreFreedom||

    Many are missing (distracted?) what Trump is doing. Trump said he's a free trader, and is willing to eliminate our tariffs if our trading partners are willing.

    China has been stealing our product secrets, intellectual property, AND taxing their citizens to subsidize their politically connected politicians in the export business. Trump seeks to end all of that. He's raising tariffs to do it, and IT WILL harm their and our economies until it ends.

    China is highly leveraged and indebted; thus, a reduction in their profits means they'll be missing their bank loan payments soon (Trump having personal experience with high leverage and debt that nearly bankrupted him). The harm will be harder and sooner in China, than in the US, because of this. It pits groups of politicians there against each other: e.g. bank owners, vs. subsidized manufacturing exporters. It threatens their ability to get re-elected. Their choice will be to liberalize their markets and end the subsidies (which harm their citizens) in the hopes of staying in power, or losing their re-elections, power, and gravy train from government subsidies.

    Ironically, this helps Chinese citizens more than US citizens, but increasing freedom helps everyone including US manufacturers who benefit from a freer and more efficient economy. That's the way I see it. Bohem celebrates the honesty tariffs will cost US consumers. He'd do better to celebrate the effort to end protectionism everywhere.

  • Echospinner||

    Tarrifs lead to economic freedom and prosperity just as war leads to peace and happiness.

    Apple needs lessons from Trump in how to make and sell phones because they are doing it wrong.

    If I say it enough times I am sure it will begin to make sense.

  • Bob Meyer||

    The president has made it very, very clear. He is prepared to tax the American people to the point of crashing the economy if that's what it takes to make the Chinese yell "Uncle". He has no concept of trade, comparative advantage or even what modern supply chains look like. Is it possible that the only reason he cut taxes and deregulated was to cushion the pain of protectionism? No, there's no one in his administration who can see as far as next Thursday, much less the next decade.

    Torturing yourself to make your enemy surrender is not something that Trump picked up while reading Sun Tzu, assuming he can read something longer than a tweet.

    The good economy could stop the Democrats from seizing control of Congress but with Trump spouting one inanity after another, he is inviting a Dems' sweep that will sweep him into history.

  • vek||

    As someone who HAS read The Art Of War, Master Sun DOES say that sometimes you have to sacrifice men to win a battle... He also says to never go into a battle that you do not already know you will win.

    We don't need to punish our economy to the point of depression for China to yell uncle. They're VERY vulnerable. We are THE ONLY market in the world that can buy that many goods from them. In short, lose our sales, and they have nothing to do with all that manufacturing capacity. They have a depression, mass unemployment, and riots on their hands. We on the other hand can simply import from India, Vietnam, Mexico, OR even shift some manufacturing back here.

    WE have options. They do not. In other words we have the upper hand. IF Trump and congress are willing to go to the mat over this, it is literally impossible for China not to break first.

    That you're such an idiot you can't understand the concept of accepting short term discomfort for far greater returns in the future shows you to be a very pedestrian, middle class, small minded thinker. Pain now for more pleasure in the future is an investment. This is a battle we can easily win if we choose to.

  • WJack||

    Trump does not understand business, he only made about one billion.

  • Trollificus||

    Somehow, this went from "making iPhones in the US" to "making every component part" in the US, when it came time to come up with a scare price for the article.

    There's also a lot larger dose of "too big to fail" in this article than I'm comfortable with from REASON, though I'm getting used to their remarkable flexibility wrt libertarian principles.

  • Trollificus||

    Somehow, this went from "making iPhones in the US" to "making every component part" in the US, when it came time to come up with a scare price for the article.

    There's also a lot larger dose of "too big to fail" in this article than I'm comfortable with from REASON, though I'm getting used to their remarkable flexibility wrt libertarian principles.

  • HANSENWT||

    Sony will stay the same price and they build a much better product....completely in Japan...(also more and more sony and samsung products in iphones anyways)....so what's the problem again?

  • David Axelrod||

    It is not physically possible to build the iPhones in America due to 1) the enormous production quantities, 2) the fluctuating labor requirements and 3) government regulations/redtape.

  • moschinoonline||

    Those higher import taxes on e-cigarettes would raise prices for consumers, strike a blow against public health in America, and jeopardize the future of a vaping industry that may not have ever come into being without the free exchange of goods and ideas across international borders.

    It's like he's an evil time lord snuffing out would-be vaping Americans across parallel timelines!
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