Silicon Valley Bows to Trump: Apple to Build iPhones in America

With Silicon Valley CEOs terrified that President Donald Trump will retaliate against offshoring production, Apple is already preparing to move iPhone production back to America. The Nikkei Asian Review reported:

“Apple asked both Foxconn and Pegatron Corp., the two iPhone assemblers, in June to look into making iPhones in the U.S.,” a source said. “Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns.”

As Breitbart News reported, candidate Donald Trump, while speaking at Liberty University in January, said, “We’re going to get Apple Computer to build their damn computers and things in this country, instead of in other countries.” He added, “We gotta bring back the jobs from China, we gotta bring back the jobs from Japan, and all these countries that are ripping us off. And we’re gonna do that. And we are gonna do that.”

In March, Trump went after manufacturers who relocate production to China, where Apple’s assemblers churn out iPhones, iPads and MacBooks. “How does it help us when they make it in China?”

Already referred to as the “Valley of the Democrats” for the over 83 percent of Silicon Valley tech CEO and employee donations that went to Democrats in the 2008 and 2012 presidential campaigns, Trump’s populist comments caused Silicon Valley corporate CEOs to double down on electing a Democrats, with over 99 percent of Silicon Valley’s $8.6 million in contributions in the presidential primaries going to Hillary Clinton and Sen. Bernie Sanders (I-VT).

I have built consumer electronics for 20 years (including cell phones). You can build them in the U.S. within 6 months of the decision to do so and at very high volume within two years. The only requirement would be to find the floor space near a major airport. The cost differential would be about +10-15%. They should set up the facility in the Southeast (good labor climate). The amount of “consumer goodwill” would be immensely helpful to them. From what I understand they pretend to care about that stuff.

Contrary to what most of the press would say, China already has very large incentives to build in China...like if you don’t build in country, you cannot build. The will screw you big time.

I figure if I can do it (and I have done it on more than one occasion) that all the Apple “Geniuses” could figure it out.

I am a free trader (or, as you so cleverly stated it, a “free traitor”). A little bit of Econ I would be in order here, as well as some history. The last time we had a policy of reducing free trade, it was one of the contributing factors that led to the Great Depression and World War II.

Before your heads explode, let me assure you that I believe that trade deals have to be fair and if they are not, we shouldn’t get into them. That said, having a president “telling” an independent company where they are allowed to produce product is a bit tyrannical, don’t you believe? For anyone who believes that we should have a constitutionally-constrained president instead of a dictator, please let me know where is it in the Constitution that the President is given this power?

That big point aside, and assuming there are no security issues, companies should produce product wherever they can get the lowest cost / highest quality, period. That is their objective: to maximize shareholder profit. Or should we have a command controlled economy where a king tells companies where and how they should produce products?

Furthermore, any time you force a company to produce in a place where the costs are higher and / or the quality is lower, the cost to the consumer goes up and the quality goes down. Then what will you do when foreign producers manufacture higher quality, lower cost phones? Put a huge tariff on them so the cost goes even higher still to the US consumer? If you do this, the consumer will of course lose. Then what would happen? Do you think that other countries will not do the same thing? The end result is a “beggar thy neighbor” situation whereby world trade decreases, prices rise, quality decreases, and the world GDP goes down. Everyone becomes poorer and the world becomes a more dangerous place.

Not exactly “winning”, is it?

The better strategy is to negotiate fair trade deals and let the cards fall where they may. It’s called “competition”, and it works really well. If China has cheaper workers, the US should move up the value chain and have better engineers, who make more per hour. That’s how the US becomes more rich— by providing more value, not by competing for low wage manufacturing jobs by imposing a command and control economy.

A little bit of Econ I would be in order here, as well as some history. The last time we had a policy of reducing free trade, it was one of the contributing factors that led to the Great Depression and World War II.

There were a whole lot of factors that lead to the Great Depression. The The Smoot-Hawley Tariff was a consequence of it, not an initial cause. I'll grant reducing free trade didn't help, but the Great Depression was already on when it was implemented.

In any even, the environment is completely different now.

That said, having a president “telling” an independent company where they are allowed to produce product is a bit tyrannical, don’t you believe?

No. We voted for Trump because we wanted a President who would look out for us, not everyone else at our expense.

For anyone who believes that we should have a constitutionally-constrained president instead of a dictator, please let me know where is it in the Constitution that the President is given this power?

The same place it is written that the President has the right to negotiate our jobs away to foreign countries.

That big point aside, and assuming there are no security issues

A poor assumption. Believing the Chicoms haven't stolen the technology we've shipped over there is just plain delusional.

companies should produce product wherever they can get the lowest cost / highest quality, period. That is their objective: to maximize shareholder profit. Or should we have a command controlled economy where a king tells companies where and how they should produce products?

That's a nice way of saying "Hey Veterans, thanks for your service, but given choice of you finding work or cutting costs, good luck in finding a new job."

I realize that's not what these free trade deals intend, but that's a result whether it's intended or not.

Anyway, if these companies feel the needs to ship their factories to other countries, then when the next war breaks out, let them run to the militaries of the countries they're shipping their factories to for protection.

Furthermore, any time you force a company to produce in a place where the costs are higher and / or the quality is lower, the cost to the consumer goes up and the quality goes down.

Judging from recent reports, making stuff with cheap labor doesn't translate into higher quality. Where do you think those exploding Samsung phones and washing machines were made?

As for the cost to the consumer, they may save $2.00 on a foreign made paint brush, but you would have to ignore the costs that come from making that paint brush in another country. If you make it here, you create American tax payers paying for our infrastructure, military, space program, Veteran's benefits, etc. If you make it in China, you create Chinese tax payers paying for their infrastructure, military, space program, Veteran's benefits, etc, and those Americans who would be paying into our system are collecting unemployment benefits instead. Look at our crumbling infrastructure, and tell me how consumers have benefitted from having their jobs shipped overseas.

Then what will you do when foreign producers manufacture higher quality, lower cost phones? Put a huge tariff on them so the cost goes even higher still to the US consumer? If you do this, the consumer will of course lose.

And the consumers don't lose when you ship their jobs to other countries, leaving them with part time jobs as sales clerks with no benefits?

The better strategy is to negotiate fair trade deals and let the cards fall where they may.

I agree, and Trump said he would do that. However, that's not what current free trade deals are doing.

Hi, TwelveOfTwenty,

I’m very sorry for my late response. I was just alerted to your response now. Thank you for responding. Here is my response:

My statement: That said, having a president “telling” an independent company where they are allowed to produce a product is a bit tyrannical, don’t you believe?

Your response: No. We voted for Trump because we wanted a President who would look out for us, not everyone else at our expense.

My response to your response: With all due respect, you didn’t address my point. Whether a president will “look out for us” or not, does not change if he is a tyrant or not. Nowhere in the Constitution is a president granted the power to tell a company where to produce it’s product and given that power only if he is looking out for us. Either we believe in Constitutionally limited government, or we do not, regardless of who we believe is looking out for us or not. If you don’t believe this, ask yourself, would you have been happy if Obama told a private company what to do because he said he was looking after us? If you would not want Obama to do it, you should not want Trump to do it. Either we believe in Constitutionally-provided limits, or we do not.

I was going to respond to your other points point by point, as you did, but as I read them, the theme was the same— you don’t seem to want a Constitutionally-constrained executive. That’s fine. I’m a Constitutional Conservative, and supporters of Trump’s actions that usurp power that is not granted to the executive by the Constitution are are not.

Just please don’t complain when a non-Constitutionally-constrained Leftist takes office in the future and does things you don’t like, because if it’s good for us, it’s good for them, too.

My sadness in all of this is that, with Trump’s actions, it probably means the end of the Constitutional Conservative movement for many decades; there are just too many people who said they were conservative who support executive over-reach. You’re right; you’ve won, and you’re happy Trump is doing what he is doing. It’s just that what he is doing goes against the Framer’s design. Good-bye to any hope in the near term of restoring our republic.

Aside from the low salaries abroad, much of the savings in manufacturing comes also from avoiding the hurdles and expenses this government heaps onto a business. From wage and hour laws to minimum age of employment, to the insurance costs involved in social security and Medicare, we also have to consider the invisible costs. Manufacturing in the US has the added costs associated with environmental requirements. Hated coal (here) supplies much cheap electricity there, without the strict emission requirements in the US. There, manufacturing waste might be spewed into the air, or simply pumped into rivers or spread onto large tracts of land, without consideration to groundwater contamination.

Yet, here in the US, our manufacturers are handcuffed by our own government. And while our government legislates rules that encourage US manufacturers to blindly engage in unsafe workspaces, underage employment and subsistence wages, they can also do so while bespoiling a foreign countryside. All the while, American free traders can sanctimoniously crow about free trade while looking away at the slave labor and environmental destruction done as a consequence of their conviction.

I'm not suggesting it's the role of the US government to correct the bad practices of other nations. But I am saying it is wrong to encourage wage and environmental arbitrage because of bad US domestic policy. The point of tariffs is not to punish foreign manufacturers. But there must be some equalization of the embedded costs of US regulation.

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