China's Trade Outlook Darkens as US Raises Stakes on Tariffs

Lloyd Doyle
September 12, 2018

If the prospect of US companies being harmed isn't enough to stop tariffs escalating, nothing short of total capitulation by America's trade partners will.

Dell Technologies said the proposed tariffs will increase costs of vital parts and components for its USA services and manufacturing operations.

Donald Trump just schooled Apple in lose-lose trade strategy.

'It would not be profitable to build the Focus Active in the USA given an expected annual sales volume of fewer than 50,000 units and its competitive segment, ' Ford said. "Exciting!" Trump said in the tweet.

Ford promptly shot down such a prospect, responding that "it would not be profitable" for the company to build the vehicle in the United States because of the relatively low sales volume it has forecast.

China's trade surplus with the United States widened to a record $31bn.

But Ford indicated in its statement that would not be the case. That left American companies on edge about whether Beijing might use its control over the heavily regulated economy to disrupt their operations by withholding licenses or launching tax, anti-monopoly or other investigations.

Ford after acknowledging the President's tweet spelled it out for the president.

Trump took a similar tack with Apple.

In a tweet on 08 September, Trump said that if Apple wants to avoid tariffs on its products, it should make those devices in the U.S. rather than China.

On top of tariffs already in place or in the works, such a move would apply new taxes to the entire $505 billion of goods the United States imported from China a year ago. He wrote: "Start building new plants now".

Apple is expected to announce three new iPhones at its event on Wednesday, Sept. 12. The US imported $505 billion in goods from China previous year. On Saturday, he posted a tweet suggesting Apple should move its production facilities to the U.S.

In an nearly schoolmarm tone, Apple explained yet again that each of its products contains American-made parts or materials and that the goods are labelled Chinese imports only because final assembly takes place in that country.

Furthermore, as the Huffington Post reported, citing federal statistics, USA trade deficit with China, and the European Union has jumped to a five-month high, in spite of the tariffs.

The technology sector is among the biggest potential losers as tariffs would make imported computer parts more expensive.

Supply chains have already begun relocating out of China in recent years as its rising labour and environmental protection costs have made the country less attractive.

Some components for Apple products, including glass from manufacturers like Corning, are made in the United States, the company has said.

- Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies.

Other reports by Iphone Fresh

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