Something that I’ve kept to myself, and between a few close friends, is a personal prediction about Apple: If Apple ever figures out that the US Dollar is more valuable in India than it is in China, it may pull out of China (partially or completely). More importantly, this should be an alarming wakeup call to China. Recently, China has been making some serious demands to Donald Trump. Many liberals have made it clear that they don’t like President-Elect Trump. But this is a time where maybe they should consider something before they start hating on Trump’s attitude towards China.
China Should Take Trump Seriously With Apple’s Exploration
Something many find skeptical of Trump is his promise to bring back manufacturing jobs. Many articles have come out about Trump and how he can’t make Apple’s manufacturing jobs come back. Even China had some banter towards Trump about manufacturing jobs! But now that there’s a lot of speculation about Apple potentially manufacturing the next iPhone in India, perhaps China will start taking President-Elect Trump seriously.
As I mentioned before, many are skeptical of Trump with what he says about China. Some people think he can’t do anything about China, let alone pressure it. It’s important to remember something: President-Elect Trump doesn’t really have to bring Chinese manufacturing jobs back to America. He just has to get them out of China. This is where that 45 percent tariff on China comes into play.
Don’t Underestimate the Threat of a Tariff
Trump pushed Apple CEO Tim Cook to bring manufacturing jobs home. Since then, Apple has explored other manufacturing options. Apple has even explored, if not still exploring, in the US. I am more than confident that Apple is afraid of the possibility that President-Elect Trump might get his way with a 45 percent tariff on Chinese imports. This would explain why Apple is also exploring India as a possibility.
Currently, a tariff on “Telephones for cellular networks or for other wireless networks” does not exist in general. The Column 2 Rate of Duty, which is the tariff imposed on a select few nations (like Cuba or North Korea). India does not have a specific trade agreement with the US, so it is apparently free trade when it comes to importing cell phones. Don’t forget: Donald Trump is not even president yet. Apple is exploring options outside of China for its manufacturing. Why? More likely than not, it’s afraid of the possibility of a 45 percent tariff on Chinese imports.
What This Means for China
Instead of making threats to a man that doesn’t care about what it thinks about him, China should get serious. Maybe it thought that it was funny to try and banter with Donald Trump. But China is now putting its own citizens at risk because it was trying to act tough. According to Apple’s Supplier Responsibility 2016 Progress Report, Apple’s suppliers employ more than 1.6 million people in 20 countries. That’s an average of 80,000 jobs in each of those 20 countries. While I’m sure that China’s share of that 1.6 million is larger than 80,000 jobs, China would still feel the sting of those jobs leaving.
The last jobs report for President Obama showed that 156,000 were added to our economy. Can you imagine what that report would look like if it reflected 80,000 jobs lost? It would only net 76,000 jobs! I don’t have to tell you that’s not a good thing. It wouldn’t really devastate China. But perhaps other companies would start looking towards India as well. It’s kind of like Brexit, in a funny way. Many scoffed at the idea of Brexit, boasting that it wouldn’t happen. Then it was voted in favor of happening. Now, there are other nations that people speculate could follow Britain. The same thing is happening with Apple’s manufacturing operations; the same thing could happen in China.
Regardless of “economic damage,” any large number of jobs leaving China creates unemployment. Unemployment leads to less tax revenue. Less tax revenue may not seem so bad at first. But if too many people lose their jobs, China may wind up with an economy that doesn’t trust it in the way it would like. Who thought that China making fun of President-Elect Trump, rather than taking him seriously, would give the US so much potential leverage in a trade negotiation?