Trump is threatening tariffs on Apple products built in China. If I was Cook,I’d pull in orders and build some finished goods inventory. If trump places the tariffs, big deal. In a couple of short years, we will have a pro trade potus in office who will undo the trump trade tantrums.
The question is, would Americans still be so quick to buy the latest Apple products if they had to pay other Americans to make them? I'll just throw this out as a possibility, I don't really know: It's possible that Apple's business model may no longer be viable. Anyway, I see a problem if a country is incapable of producing the things it consumes. (with obvious exceptions like tropical fruits of course, and certain natural resources) Over the long term there's going to be a trade imbalance. You might be getting low cost electronic trinkets today but you're selling out your children's future.
Let's look at the basic effects of cutting back trade to correct a trade deficit. The cost of imported goods becomes more expensive. The cost of certain exported goods can become less expensive. The cost of certain scarce supply capital can go down because the foreign trade country is no longer competing to buy it. (This could be something like real estate in a highly desirable area) It might even have a positive effect on individual's budgets. With prices more expensive and wages higher, they might have a higher savings to spending ratio. (i.e. instead of spending $500 on the latest Apple product, you might decide to save the money and not put it on your credit card. Typical Americans have a really low savings rate, we can argue about whether that's a good thing or not) Basically correct national trade deficits to correct individual household savings deficits.
Anyway, I suspect Apple will be able to adapt but their profit margins will be lower. In the case of Apple products, actual manufacturing costs only account for a small fraction of the end consumer price.
More importantly, why does the American President celebrate economic irrationality and the people just sit on their hands? Has nationalism out-trumped all notions of economic rationality?
Countries could always choose to let China continue to make the junk it does and pollute the planet. Then tax everyone but the Chinese for global warming. I've never bought an Apple product, expensive junk.
COOKED GOOSE If we are benefiting from it, that's great! More money for us! If we are not benefiting from it, then its an abuse on the part of those we trade with and we can't accept that! Which is no way to discuss such matters as regards trade. Trump's problem is Trump himself and his inbred permanent dislike of Obama. Howzat? When Trump "tripped" into the White House (he had lost the popular-vote election), he found his opportunity to "get back" at all those who were against him. He is very likely suffering from a psychiatric-disorder called Narcissism. (And if you don't believe that just google that word and the name Trump. See what you get.) Obama had signed (on behalf of the US) a TPP trade-agreement that had taken years to write, negotiate and set up for consideration by the governments with whom the US trades in Asia and East Asia. (Including China.) It was called TPP, which stands for TransPacific Partnership - see here. TPP was refused by Donald Dork, who negates EVERYTHING ever done by Obama. It will nonetheless come into force, without the US, this month. It is shameful, given the effort to create the agreement, that Uncle Sam will not be part of it. But the agreement is also a treaty and it must be approved by a country's legislature. (Which is a key step that Obama apparently could not get past the Replicant HofR.) Trump killed the TPP-treaty upon entering office. Because it was the handiwork of Obama, whom he detests. Instead, he decided to go after NAFTA (Canada and Mexico), which has been renegotiated. In order to see the difference between the old and new versions go here (from the Brookings Institution). The US has also missed the boat on yet another Trade Treaty with Europe that would have been beneficial to the US. Which had been intended as a successor to TPP but with yet another key trade-group called the European Union. Which, in terms of real-trade would have been more important for the US. The trade deficits with both entities (TPP and the European Union) were $140B and $172B respectively. With Donald Dork as PotUS, any wider trade-treaty (TPP or Europe) will never ever happen. His goose is cooked in both places ...
I don't think that is the Real Problem. It was heartbreaking for most who lost their jobs to China, but even China is now losing those jobs to sophisticated manufacturing processes employing robotics. China has learned that lesson is going FAST up-market in New Technologies. We must be very, very careful of what technology trade-agreements that we have with them. In the past they pilfered willy-nilly patents from around the world and respected none of them. China should have been brought before the World Trade Organization for the level of theft employed. But, that did not happen and we are left to wonder why ...
We have a pro free trade POTUS. Unfortunately there is no free trade and trying to force things back toward free trade is painful and ugly. You would prefer not to have free trade. The status quo is always comfortable.
There is NO SUCH THING A FREE TRADE. Trade agreement treaties signed, sealed and delivered by the World Trade Organization specify trade tariffs. To change them unilaterally, the US would be in infraction of those agreements. Of course, Donald Dork could not care less. From the Economist here: The threat to world trade. The rules-based system is in grave danger Donald Dork is up to his "antics" once again. Here's a PotUS who LOST THE POPULAR-VOTE behaving like a sick kid who "owns the sandbox". Will this nonsense ever end? Yeah, when American voters find once again their sanity and vote to replace him as PotUS in the November, 2019 election. Let this sad episode in American history be a lesson to all ... PS: Let's hope and pray that Mueller has him by the you-know-whats ...
Yes, it does for stupid people. This nationalism thing is only because of Trump. Funny that when Democrats said keep the Jobs here, don't give the rich the opportunity to move their corps to china. That the republicans stood up and screamed "it is their business, they own it and can do what they want" This came from Reagan, Bush Sr. and Clinton, followed by Bush Jr. One thing Obama should have done was cancel out Hank Paulsons bail outs. BUT, he may not have been elected had he not agreed to kick the can. All very confusing. One thing for sure, it all doesn't matter and conversations on here about CHANGE, or some small tweak to fix things are pathetically wasted time. We are going into a HARD recession and most likely a depression. What will the FED do ? Exactly what they are forced to do. Stop raising % rates first. Followed by a slow drop until we get to 1% maybe in 2 years, that fast. Wall Street DOW will pull back to 14K because all of the past 10 years has been a total waste. There will be NO increase in wages again, another 10 years. Been buying GOLD and now China stock. China debt is very small compared to ours. I seen the other day Jim Rickards try to write that China had 40T debt. True, only it is in Yuan, not dollars. 3 times the people and they have 5T$ US debt, that is nothing in comparison. It is amazing how uneducated people are on the FACTS
Indeed. And the lesson is that departing from the status quo is scary for people and they will fight it blindly.
The FED can't keep down interest rates artificially low for long periods of time without that eventually causing inflation. Think about it. If someone can lend you money at 1% interest and you can take that money and earn 2% interest on some other investment, the person lending the money to you is basically subsidizing your investment, and that money has to come from somewhere. Anyway, lower interest rates just prop up asset prices, so in the end it's not really free money except to anyone who already owns investment assets.
Of course that is true, if in 1945 - 1995. That 50 years defined us as AMERICAN. The last 10 of it from 85 - 95 we handed the RICH and POWERFUL the KEYS by slashing their TAX rate. Still to this day, people don't understand HOW that changed everything until it is finally put back, maybe 20 years from now ? You cannot allow rich and greedy people to continue to build their wealth, then use what they have to leverage even more in every possible way from the working class, and the Govt. That is what they do now, Amazon and the raping of the post office rates, while you pay top dollar, Bezos gets mega deals. FDR changed it all to take back and make the country great, we have gone downhill since 1985. I made the same working job rate of 23 an hour in 95 as I do today. Any industrial maintenance job starts off close to that, plus, no insurance, or costs are crazy. No sense in even arguing that anymore, there isnt anyone that can apply supply and demand, blah blah. Doesnt wash, pay is flat and we are headed into a depression. And yes, the FED will halt rate increases because the market will fall that far. By the Fall they will start cutting because people will be screaming. The whole system is screwed and bloated on BS data, including CPI or INFLATION which has moved along year over year at 5+% while the govt gives you a BS # of CPI @ 1%. Including congress, pelosi, the republicans, Obama, Bush, etc. all dont want the bad times on their plate, thus, kick the can, the bubble. We will see 1% rate by 2022 and it should not help. By then, the candy bar you paid .35c for in 1995 and pay $1.25 today will be $1.75. Everything goes up and if your not prepared, most are not, you will be on a diet of cereal, cup o soup, and bread because the economy will be in ****.
