we estimate china only makes $8.46 from an iphone — and that’s why trump’s trade war is futile - 46 touch screen overlay

So far, the Trump administration has imposed tariffs on China mainly on industrial products such as aircraft engines and natural gas compressors.
But the US government has also threatened to impose tariffs on other $200 billion worth of goods if the dispute continues.
There is no publication of a list of all goods that may be subject to tariffs, but it must include consumer electronics such as smartphones, the largest single product category in China's exports to the United StatesS. One well-
Known products that may be affected are Apple iPhones assembled in China.
When the iPhone entered the U. S. marketS.
It is recorded as an imported product, and the factory cost is about $240, which increases the huge import in the United States. S. -
China's bilateral trade deficit
The import of the IPhone is a huge loss for the United States. S.
He believes that "China will pay US $500 billion a year from our country to rebuild China.
Imports of the iPhone 7 and 7 Plus are estimated at $15.
The trade deficit with China increased by 7 billion from last year.
But, as our research on iPhone cost decomposition shows, this figure does not reflect the reality of how much value China actually gets from iPhone exports or many brands
The name of the electronic product it shipped to the United StatesS. and elsewhere.
Thanks to global-
In the supply chain running through China, the trade deficit in the modern economy is not always what it looks like.
Who really makes iPhones check the iPhone 7 more closely to see how much value China actually gets.
Start with the most valuable components that make up the iPhone: touch screen displays, memory chips, microprocessor, etc.
They come from a combination of the United States. S.
Japanese, Korean and Taiwanese companies such as Intel, Sony, Samsung and Foxconn.
Almost none of them are made in China.
Apple buys parts and ships them to China;
Then they left China in the iPhone.
So what about the famous factories in China that have millions of workers making iPhones? The companies that own these factories, including Foxconn, are all based in Taiwan. Of the factory-
The cost is estimated at $237.
When the iPhone 7 was released in late 2016, IHS Markit provided 45 photos, and we calculated that China's revenue was about $8. 46, or 3.
6% of the total.
This includes batteries provided by a Chinese company and Labor for assembly. The other $228.
99 go somewhere elseThe U. S.
Japan cut prices by about $68 each, Taiwan cut prices by about $48 each, and South Korea cut prices by about $17 each.
We estimate that the gross profit from the retail price is about $283-the gross profit of the 32 gb model when the phone goes on sale is about $649-directly into Apple's vault.
In short, there are many in China (low-paid)
Profits flow to other countries.
From the perspective of trade balance, this is a better way of thinking about the United States. S. -
China's trade deficit related to an iPhone will only calculate China's added value, $8.
$50, not $240 as China's imports to the United StatesS.
Scholars have found similar results in the wider United States. S. -
China's trade balance, though the gap is not so extreme compared to the iPhone example.
In 2017 dollars of 375 billion beauty yuan trade deficit in,
Third, it actually involves input from other places-including the United States. S.
It is a good thing for the United States to use China as a huge assembly site. S.
If not the American economy,S.
Factory workers.
By leveraging a large, efficient global supply chain, Apple can bring new products to market at a price comparable to its competitors, especially South Korean giant Samsung.
Consumers benefit from creating new products, and thousands of companies and individuals build businesses around creating apps for sale in app stores.
Apple makes use of its profits to pay wages to hardware and software engineers, marketers, executives, lawyers and Apple store employees.
Most of these jobs are in the United States. S.
If the next round of tariffs makes the iPhone more expensive, demand will drop.
Meanwhile, Samsung has more than half of its phones in South Korea and Vietnam. S.
Parts, will not be affected by tariffs on goods from China, and will be able to get market share from Apple, transfer profits and high-wage jobs from the United StatesS. to South Korea.
In other words, research shows that globalization hurts some Americans and makes life better for many others.
In turn, globalization and tariffs will create winners and losers-the latter may be much more.
When we discuss these topics with policy makers and the media, we are often asked, "Why can't Apple produce iPhones in the US? S.
"The main problem is that manufacturing in the global electronics industry was transferred to Asia in the 1980 and 1990 s.
Companies like Apple have to face this reality.
As the numbers we cite show, there is not much value available in the United StatesS.
The economy or its staff assemble the iphone from parts made in Asia.
While it is possible to do so, it will take at least a few years to build it, and in Asia, the cost per unit is higher than the cost of production, requiring policy makers to provide a lot of carrots and sticks, involve many companies-like Wisconsin's $3 billion subsidy to Foxconn, for example, where Foxconn built an LCD factory.
It is flawed to deal with the challenges from China, of course, the United States has a lotS.
When it comes to China's high-
Whether it is the lack of intellectual property protection or the absence of intellectual property protection, the science and technology industry and policies
Tariff barriers that prevent big tech companies such as Google and Facebook from entering the Chinese market.
There is still more difficult and complex room for negotiations to address these issues.
But in terms of trade, policy should reflect that manufacturing is now a global network.
The World Trade Organization has developed an alternative set of trade figures to show trade per country in value-added terms, but the government seems to have missed the memorandum.
Trump's trade war is based on a simple understanding of trade balance.
Expanding tariffs to more and more goods will put pressure on the United States. S.
Consumers, workers and businesses.
When the dispute is over, there is no guarantee that the final result will be good.
This is a war that should not have been launched.
Jason derdrick, professor at Syracuse University;
University of California, Berkeley research assistant Greg Lyndon and Kenneth L.