Economics news, commentary, research

Friday, April 11, 2025

Here’s how much a ‘Made in the USA’ iPhone would cost

https://www.cnbc.com/2025/04/11/heres-how-much-a-made-in-the-usa-iphone-would-cost.html

Chat GPT

Evaluate the following story:

Answer:

This story presents a well-researched and nuanced examination of the economic and logistical complexities behind the concept of a “Made in the USA” iPhone. Here's an evaluation based on structure, clarity, sourcing, balance, and insight:

✅ Strengths

1. Clear and Cohesive Narrative

The article traces the idea of an American-made iPhone from Steve Jobs’ 2011 comment to present-day efforts, providing a historical arc that adds context.
It ties policy (tariffs) and business realities (labor, supply chain) together coherently.

2. Strong Sourcing and Quotes

It draws on multiple credible voices: Bank of America analysts, Wedbush, Needham, Counterpoint Research, Morgan Stanley, and quotes from both Apple leadership and U.S. officials.
Realistic cost projections, such as a $3,500 iPhone and $200 per-unit labor in the U.S., provide substance.

3. Balanced Reporting

It doesn't take a partisan stance. While it notes Trump's vision and the administration’s rhetoric, it contrasts that with industry skepticism and past failed attempts, such as the Foxconn Wisconsin plant.
Highlights Cook’s strategic diplomacy rather than direct opposition, showing how Apple navigates politics.

4. Rich Detail and Global Context

Explains not just the “how much” question, but why it’s so difficult: lack of tooling engineers, globalized supply chains, worker conditions in China vs. labor laws in the U.S., and historical attempts in Brazil.

⚠️ Weaknesses / Room for Improvement

1. Timeline and Attribution Confusion

The piece occasionally blurs timelines, like referring to current efforts in 2025 with policy decisions from the first Trump term or citing tariff pauses without full context (e.g., no clarity on why there's a 90-day pause).
Could use clearer date labels or timeline sidebars to help less-informed readers keep track of developments.

2. Attribution Gaps

Statements from unnamed "experts" or “analysts” could benefit from clearer attribution in a few spots to maintain transparency and credibility.

3. Tone of Some Quotes

Commerce Secretary Lutnick's quote about “millions and millions of human beings screwing in little screws” comes off as dismissive or overly simplistic, and the article doesn’t counterbalance it with a technical reality check. A brief critique or context there would have helped.

📊 Overall Assessment

Grade: A-

The story is a strong piece of explanatory journalism that blends economics, policy, and corporate strategy to address a complex question. It’s informative and accessible, and it avoids sensationalism while still highlighting the real-world impact of political rhetoric on high-stakes business decisions.

With a bit more precision on sourcing and a cleaner timeline structure, it would be top-tier reporting.

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Request: If tariff war escalates to the point where all trade between US and China stops, may Apple be forced to make iPhone using another country but China to make them or part of them?

...

Answer:

Absolutely — if trade between the U.S. and China were to halt entirely, Apple would almost certainly have no choice but to shift iPhone production—at least partially—away from China. And they’ve already started laying the groundwork for that very scenario.

Here's what would likely happen and why:

🛑 If All U.S.-China Trade Stops: Immediate Implications for Apple

No Import of Finished iPhones
- Currently, over 80% of iPhones are assembled in China. If those can't be shipped to the U.S., Apple loses access to its biggest market.
No Access to Chinese Components
- Even if Apple assembled phones elsewhere, many key components (batteries, cables, sensors, etc.) are still made in China. A full cutoff would affect not just assembly, but supply chain logistics.
Software and Services Might Be Disrupted
- While less direct, a trade war might also lead to restrictions on data flows or software development partnerships across borders, which Apple depends on.

🔄 What Apple Could Do (And Is Already Doing)

✅ Diversify Manufacturing

India: Apple already assembles iPhones (like the 15 and some 16 models) in India via Foxconn and Pegatron. India is poised to be China’s replacement for some iPhone models, but its scale and infrastructure are still catching up.
Vietnam: Apple uses Vietnam for AirPods, iPads, and some MacBooks, and the country could expand its role if needed.
Brazil: Apple produces iPhones there for the Latin American market to avoid tariffs. Like India, it's not yet fully capable of mass global supply, but it could scale up in an emergency.

✅ Build "China-Free" Supply Chains

Apple has quietly been mapping alternative suppliers for components over the past few years, especially after U.S.-China tensions ramped up during the Trump administration and COVID disrupted Chinese production.
TSMC (which makes Apple’s chips) now has a plant in Arizona, which is small but symbolic of future shifts.

🧠 Long-Term Reality: Apple’s Worst-Case Contingency

Apple wouldn’t just make the iPhone in another country — it would have to rebuild a global supply chain. That’s not just about shifting factories; it’s about:

Finding skilled labor
Building logistics infrastructure
Sourcing non-Chinese alternatives for hundreds of parts

This would take years, billions of dollars, and intense coordination — but it’s feasible with Apple’s resources.

🔮 Bottom Line

If U.S.-China trade freezes, Apple would be forced to pivot—fast. But it wouldn’t be caught totally flat-footed. The company’s gradual supply chain diversification (India, Vietnam, Arizona) is an insurance policy for exactly this kind of geopolitical risk.

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How big is Apple relative to US stock market and US economy in general? I wonder how that change could potentially each one.

.....

Apple vs. U.S. Stock Market

📈 Apple’s Market Cap

As of early 2025, Apple’s market cap is hovering around $2.6 to $2.8 trillion (can confirm current number if you want).

🧮 Share of the S&P 500

The S&P 500, the index of the 500 largest public companies in the U.S., has a total market cap of around $45–50 trillion.
Apple alone makes up about 5–6% of the S&P 500, making it the largest or second-largest component, often swapping places with Microsoft.

📌 That means 1 out of every 20 dollars in the S&P 500 is Apple.

💥 Impact of a Major Apple Shock

If something seriously hits Apple — like a manufacturing shutdown due to a trade freeze — it could:

Drag down the entire index, because of how heavily Apple is weighted.
Trigger market-wide volatility, especially in tech.
Influence investor confidence in U.S. innovation and global competitiveness.

🇺🇸 Apple vs. U.S. Economy

💵 U.S. GDP vs. Apple Revenue

The U.S. GDP in 2024 was about $28 trillion.
Apple’s annual revenue in FY2023 was around $400 billion, or about 1.4% of U.S. GDP.

💼 Employment and Ecosystem

Apple itself employs about 160,000 people directly, but its indirect workforce (through suppliers, app developers, retailers, etc.) is estimated to support over 2 million jobs in the U.S..
It is also one of the largest corporate taxpayers in the country.

⚙️ Apple isn't just a company — it's an economic ecosystem. Its business influences entire industries: chips, displays, logistics, retail, services, and even real estate (think of all those flagship stores and campuses).

🔮 So What Happens If the China Trade Breaks Down?

🧨 Short-Term:

Stock market dips — especially tech-heavy indices like the Nasdaq.
Investor panic over supply chain instability.
Rising iPhone prices could hit consumer sentiment and inflation metrics.

🏗️ Medium to Long-Term:

Apple spends tens of billions restructuring its supply chain.
Shift could create jobs and infrastructure in India, Vietnam, the U.S., etc.
Potential for re-industrialization in the U.S., if strategically managed.

But the transition would be painful and expensive, both for Apple and for markets.

Tuesday, March 4, 2025

CNBC: Politics Trump’s tariffs showcase his extraordinary presidential power — and its limitations

https://www.cnbc.com/2025/03/04/trump-tariffs-china-mexico-canada-presidential-authority.html

President Trump started trade wars. What does he want?

Donald Trump initiated trade wars primarily to address what he perceived as unfair trade practices by other countries, particularly China. His main goals were:

Reducing Trade Deficits: Trump believed that the U.S. was being taken advantage of in trade, with countries like China running large trade surpluses while the U.S. had significant trade deficits. He aimed to reduce these deficits by imposing tariffs on foreign goods, especially Chinese imports.
Protecting U.S. Jobs: Trump argued that trade imbalances led to the loss of American manufacturing jobs, as companies moved operations abroad to take advantage of cheaper labor and less stringent regulations. By raising tariffs on foreign products, Trump hoped to make it more attractive for companies to keep or bring back jobs to the U.S.
Enforcing Fair Trade Practices: He accused some countries, notably China, of engaging in unfair trade practices, such as intellectual property theft, forced technology transfers, and currency manipulation. Trump's tariffs were partly meant to push those countries to alter their practices and adopt more equitable trade policies.
Strengthening American Industry: Through protectionist policies, Trump aimed to bolster American industries, particularly steel, aluminum, and other manufacturing sectors that were struggling due to competition from lower-cost foreign goods.
Negotiating Better Deals: Trump also used tariffs as a bargaining tool, aiming to renegotiate trade agreements (e.g., NAFTA, which became the USMCA) and force other countries to make concessions, such as opening their markets more to American goods.

In essence, Trump's trade wars were part of his broader "America First" economic agenda, which sought to prioritize U.S. interests in global trade and reduce reliance on foreign nations for manufacturing and products.

You mention "Reducing Trade Deficits" - are there any economic studies cited by the Trump administration to justify particular level of tariffs and how they can accomplish desirable level of tariffs. Provide me with an estimate of what Trump administration regards as acceptable level of trade deficit. You mention: "Protecting U.S. Jobs" what study and what number Trump administration cites to justify the tariffs and how they will accomplished desired result when it comes jobs outcome. You mention: "Enforcing Fair Trade Practices" how tariffs have anything to do with those practices? You mention: "Strengthening American Industry" Can you cite any study from Trump administration how this would work. And is the goal to have America move away from high tech industries and become a country producing materials?

You're asking for a deeper look into the economic justification and studies behind the Trump administration's trade policies, specifically regarding the issues of trade deficits, job protection, fair trade practices, and strengthening American industry. I'll break it down by each point, providing the context and insights, but it's important to note that while some economic theories were referenced, direct, clear-cut studies from the Trump administration backing specific policy decisions are often more rhetorical or general in nature. Let’s take a closer look at each aspect:

1. Reducing Trade Deficits

Economic Studies or Justifications Cited:

The Trump administration did not rely on one particular study to justify tariffs, but rather made a broader claim that reducing trade deficits would result in a healthier, more balanced economy. The U.S. Trade Representative (USTR) office cited several analyses showing how trade deficits could be harmful to American workers and industries.

Trade Deficit and GDP Growth: One argument often brought up was that a large trade deficit means that U.S. dollars are flowing out of the country, which could negatively impact domestic industries and wage growth. The administration’s theory was that tariffs could help "repatriate" some of that capital, stimulating U.S. production.
Studies from the National Bureau of Economic Research (NBER) and other economists have suggested that reducing trade deficits could result in a more balanced economic growth pattern, but many economists disagree with the idea that tariffs are the optimal solution to trade imbalances, as tariffs can increase consumer prices and disrupt global supply chains.

Acceptable Level of Trade Deficit:

The Trump administration did not state a precise "acceptable" level of trade deficit, but Trump repeatedly said that the U.S. trade deficit, especially with China, was too large, and that a fairer trade balance would help achieve his economic goals. Trump often targeted a reduction in the trade deficit by $200 billion with China, as part of the U.S.-China trade negotiations. That figure was part of his negotiation strategy, but not necessarily a clear “target” for the deficit across all countries.

2. Protecting U.S. Jobs

Studies or Data Cited:

The Trump administration argued that trade imbalances, particularly with China, were a primary reason for the loss of American manufacturing jobs. The most frequently cited justification was the idea that offshoring manufacturing led to job losses, particularly in industries like steel, textiles, and automotive.

Economic Studies: One of the key studies often cited was from Bureau of Economic Analysis (BEA) and U.S. International Trade Commission (USITC), which found that manufacturing job losses were partly attributed to unfair trade practices (e.g., dumping or state subsidies). However, the overall consensus from economists was more nuanced. Many believed that automation and technological advancements were more significant drivers of manufacturing job losses than trade deficits.
Job Losses vs. Job Gains: A report from the Council of Economic Advisers (CEA) under Trump acknowledged that trade policies could save some jobs, but it also recognized that tariffs would likely lead to higher prices for consumers, potentially reducing purchasing power and affecting employment in other sectors, such as retail.

How Tariffs Would Achieve Job Gains:

The administration argued that by imposing tariffs on imports (especially Chinese goods), U.S. manufacturers would face less competition from lower-cost goods and could be incentivized to keep production within the U.S. or bring some production back. This would theoretically support higher-wage, skilled manufacturing jobs. However, these arguments were speculative, and many critics noted that the net job creation could be minimal or offset by job losses in consumer-facing industries due to higher costs.

3. Enforcing Fair Trade Practices

How Tariffs Relate to Fair Trade Practices:

The concept of "fair trade" was central to Trump’s policies, particularly regarding China. Trump’s administration argued that China engaged in unfair trade practices, such as:

Intellectual Property Theft: The U.S. Trade Representative (USTR) reported that China was involved in systematic theft of intellectual property, including technology and patents. The tariffs were part of the broader strategy to pressure China to adhere to better intellectual property protections.
Forced Technology Transfers: U.S. companies in China were often required to transfer technology to Chinese firms as a condition for doing business. This practice was another key grievance, and tariffs were meant to disincentivize this behavior.
State-Supported Industries: Trump argued that Chinese industries were often subsidized by the state, making it difficult for U.S. companies to compete on an even playing field.

While tariffs were the main tool used, the goal was to create leverage in negotiations to force China to change these practices and engage in fairer trade agreements. Studies like those from the U.S. Trade Representative and U.S. Department of Commerce cited that tariffs could create pressure on China to reform its trade and economic policies, but whether tariffs would force compliance was widely debated.

4. Strengthening American Industry

Studies or Economic Data Cited:

The Trump administration often linked tariffs with revitalizing American manufacturing, particularly industries like steel, aluminum, and textiles. The main idea was to use tariffs to reduce competition from foreign-produced goods, making domestic products more competitive. However, empirical studies to prove the long-term effectiveness of this approach were scant.

Steel and Aluminum Tariffs: The administration pointed to studies suggesting that tariffs on steel and aluminum could lead to growth in these sectors. However, reports from U.S. International Trade Commission (USITC) indicated that the benefit to the steel and aluminum industries from tariffs would be small compared to the broader costs to industries relying on these materials.
American Manufacturing Revival: Trump also frequently cited the manufacturing renaissance that occurred prior to the trade wars in the U.S., which many attributed to factors like natural resource availability and technological investment rather than tariffs specifically. Some economists have suggested that the real potential for American industrial growth lies in high-tech sectors like robotics, AI, and clean energy.

Is the Goal to Move Away from High-Tech and Focus on Materials?

The goal was somewhat paradoxical. While the administration emphasized bringing manufacturing back to the U.S., it did not explicitly call for a shift away from high-tech industries. However, the focus on steel, aluminum, and other materials suggested a preference for revitalizing traditional manufacturing sectors rather than high-tech innovation. Critics argued that the U.S. could have focused more on high-tech industries, as this was seen as a more sustainable long-term strategy for economic growth and global competitiveness.

Conclusion:

The Trump administration’s trade policies, especially in terms of tariffs, were based on a mix of economic theories, broad claims, and political objectives rather than clear, comprehensive studies demonstrating the effectiveness of the tariffs at the specific levels imposed. The administration’s policies focused on reducing trade deficits, protecting manufacturing jobs, enforcing fair trade practices, and strengthening American industry. However, the effectiveness of these policies was hotly debated, and many economists questioned whether tariffs were the optimal solution.

CNBC: Economy Stagflation fears bubble up as Trump tariffs take effect and the economy slows

https://www.cnbc.com/2025/03/04/stagflation-fears-swirl-as-trump-tariffs-take-effect-and-economy-slows.html

GDPNow logo

https://www.atlantafed.org/cqer/research/gdpnow

Saturday, January 11, 2025

CNBC: Americans are still flocking to these 10 states—but not as many as before

Americans are still flocking to these 10 states—but not as many as before Published Sat, Jan 11 2025 9:00 AM EST

https://www.cnbc.com/2025/01/11/where-americans-are-moving-why-migration-is-slowing-down.html

CNBC: Where new jobs were in 2024, and potential growth areas in a second Trump term

Where new jobs were in 2024, and potential growth areas in a second Trump term

PUBLISHED SAT, JAN 11 20258:28 AM EST

https://www.cnbc.com/2025/01/11/where-new-jobs-were-in-2024-and-potential-growth-areas-in-a-second-trump-term.html