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President Donald Trump had dinner on Friday night with Apple CEO Tim Cook, who may have imparted a critical lesson in international economics on the "Tariff Man" president. While some of his top advisors spent the weekend defending Trump's increasingly nonsensical tariff and trade policy, the president himself appears to have achieved a new level of understanding about how those policies are affecting American businesses.
As he was heading back to Washington, D.C., from a vacation at his hotel in Bedminster, New Jersey, on Sunday, Trump told reporters that Cook "made a very compelling argument" about how tariffs were making it more difficult for Apple to compete with companies like Samsung. Like many American-based tech firms, Apple relies on China to manufacture much of its products, even though high-level jobs in design and software engineering is done in America. As I wrote last year:
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.
In the past, Trump has argued that Apple should simply do all it's manufacturing in America—despite the fact that doing so would likely make the retail price for an iPhone double or triple. But while Trump never appeared to be swayed by fears that iPhones would suddenly be too expensive for many Americans to afford, it looks like Cook might have appealed to Trump's competitive nature during their dinner.
As Bloomberg points out, Samsung assembles its products in Vietnam and South Korea, which means it can import all those globally sourced component parts without having to pay Trump's tariffs. Apple can't.
I mean, the deeper problem is that said study is hilarious trash, to the point where focus on nitpicky clarifications gives the whole thing undeserved credence. https://t.co/1QUsrpPviR
— Julian Sanchez (@normative) August 20, 2019
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