China makes $8.46 from an iPhone. That's why a U.S. trade war is futile
The Trump administration's tariffs on China have so far targeted mostly industrial goods like aircraft engines and gas compressors. But the administration has also threatened to slap tariffs on $200 billion in other goods if the dispute continues.
No list of goods has been released, but the list would have to include consumer electronics, such as smartphones, which is the largest single product category in China's exports to the U.S.
One well-known product that might be affected is Apple's iPhone, which is assembled in China. When an iPhone arrives in the U.S., it is recorded as an import at its factory cost of about $240, which is added to the massive U.S.-China bilateral trade deficit.
IPhone imports look like a big loss to the U.S., at least to the president, who argues that "China has been taking out $500 billion a year out of our country and rebuilding China." One estimate suggests that imports of the iPhone 7 and 7 Plus contributed $15.7 billion to last year's trade deficit with China.
在特朗普看来，进口IPhone对美国来说是一个巨大的损失，他说:“中国每年从我们国家赚走了5000亿美元，重振中国。”据估计，iPhone 7和7 Plus的进口为去年美国对华贸易逆差贡献了157亿美元。
Who really makes the iPhone?
Let's examine an iPhone 7 a little more closely to see how much value China is actually getting.
Start with the most valuable components that make up an iPhone: the touch screen display, memory chips, microprocessors and so on. They come from a mix of U.S., Japanese, Korean and Taiwanese companies, such as Intel, Sony, Samsung and Foxconn. Almost none of them are manufactured in China. Apple buys the components and has them shipped to China; then they leave China inside an iPhone.
So what about all of those famous factories in China with millions of workers making iPhones? The companies that own those factories, including Foxconn, are all based in Taiwan. Of the factory-cost estimate of $237.45 from IHS Markit at the time the iPhone 7 was released in late 2016, we calculate that all that's earned in China is about $8.46, or 3.6 percent of the total. That includes a battery supplied by a Chinese company and the labor used for assembly.
那么，中国那些拥有数百万工人的知名iphone生产工厂呢？拥有这些工厂的公司，包括富士康，都位于台湾。在2016年末发布iPhone 7时，IHS Markit估计其出厂成本为237.45美元，我们计算得出，中国赚取的利润约为8.46美元，占总利润的3.6%，这个费用包括一家中国公司提供的电池和组装手机的工人工资。
The other $228.99 goes elsewhere. The U.S. and Japan each take a roughly $68 cut, Taiwan gets about $48, and a little under $17 goes to South Korea. And we estimate that about $283 of gross profit from the retail price - about $649 for a 32GB model when the phone debuted - goes straight to Apple's coffers.
In short, China gets a lot of (low-paid) jobs, while the profits flow to other countries.
The trade balance in perspective
Scholars have found similar results for the broader U.S.-China trade balance, although the disparity is less extreme than in the iPhone example. Of the 2017 trade deficit of $375 billion, probably one-third actually involves inputs that came from elsewhere - including the U.S.
The use of China as a giant assembly floor has been good for the U.S. economy, if not for U.S. factory workers. By taking advantage of a vast, highly efficient global supply chain, Apple can bring new products to market at prices comparable to its competitors, most notably the Korean giant Samsung.
Consumers benefit from innovative products, and thousands of companies and individuals have built businesses around creating apps to sell in the App Store. Apple uses its profits to pay its armies of hardware and software engineers, marketers, executives, lawyers and Apple Store employees. And most of these jobs are in the U.S.
Put another way, research has shown globalization hurt some Americans while it made life better for many others. Putting globalization in reverse with tariffs will also create winners and losers - and there could be far more of the latter.
Why not make the iPhone in America?
When we discuss these topics with policymakers and the media, we're often asked, "Why can't Apple just make iPhones in the U.S.?"
The main problem is that the manufacturing side of the global electronics industry was moved to Asia in the 1980s and 1990s. Companies like Apple have to deal with this reality.
A flawed response to the challenge from China
There is, of course, plenty for the U.S. to complain about when it comes to China's high-tech industry and policies, whether it's the lack of intellectual property protection or non-tariff barriers that keep major tech companies such as Google and Facebook out of the huge Chinese market. There is room for much tougher and more sophisticated bargaining to address these issues.
But where trade is concerned, policies should reflect that manufacturing is now a global network. The World Trade Organization has already developed an alternate set of trade numbers that shows each country's trade in value added terms, but the administration seems to have missed the memo.
Trump's trade war is based on a simplistic understanding of the trade balance. Expanding tariffs to more and more goods will weigh on U.S. consumers, workers and businesses. And there's no guarantee that the final outcome will be good when the dispute ends.
原创翻译：三泰虎 http://www.santaihu.com/45526.html 译者：Joyceliu
Sean22.000 hours ago
And Tim charges 600 USD?
Fedup20.000 hours ago
Ask yourself is an iphone really worth $800+ ?
Ningc21.000 hours ago
After open up an I-Phone, the major parts are from U S(Intel, chip-processor), and Korea, Japan, Taiwan.....Chinese made between $8.46 to $10 on assembling labor cost. According to Wall Street Journal, Apple is assembling some of their I-Phone in India, so the labor cost is much less than $8.46.
Sean22.000 hours ago
Why is Apple not making I phones in the USA?
Tador19.000 hours ago
For $ 8.46 per i-phone, China can ask US and Apple to return manufacturing to US. Otherwise, a penalty tariff of 100% should charge on all i-phones when exported to US and even anywhere else. WE will see how the share price of Apple will rock the Wall Street.