Trump's taxing problem: The end of 'affordable' iPhones

We will have to wait and see

"There is a "but", however. Donald Trump himself. Given his propensity for verbal pugilism during the presidential campaign, it's difficult to know what words were intended simply to score points and grab the sound bite and which was actual policy in the making"

Exactly right. We are all wondering if he really meant all those strange, populist things he said.

Actually it might bring the opposite

I mean for many companies import duties won't actually matter. Large International corporations surely will find ways to dodge any import duty, as they can simply avoid crossing US borders.

There might be another point. Large companies might move out of the US and set their headquarters somewhere else. Some highly qualified employees might move them, while others might simply quit... bringing a lot more decently qualified people on the "market". They might perhaps found their own company, or work at another company raising the average of skill there.

In any case, there is not much telling what Trump will actually do.

To get around that, firms will need to build infrastructure in the US and take on, presumably, less skilled and more expensive domestic employees.

The hiring of skilled IT people has been a problem since before I joined the IT industry in the 1970's, and so has been a factor in many of the advances that have either made IT easier for less skilled people or enables highly skilled people to be more effective.

Trump has to be careful

Even that darling of 'american manufacturing' Boeing uses parts made all over the world on their Aircraft.

If President Donald Duck puts import tariffs on all those imports then the Airlines will switch to Airbus.

They use American made parts which is what he wants.

So the US aircraft maker can't compete with Airbus because they have to pay more for the same parts than their European Competition.

How is this a win for the USA?

Isn't Economics wonderful.

I am Mad

As an American living in the UK then I just cant win.

We had this Brexit thing and that gave happy happy joy joy feelings that all foreigners (lawl) would be kicked out and give me a chance at getting a lovely job when manufacturing comes back from China to the UK, perhaps filled by picking strawberries during free time due to lack of staff.

Now we have this Trump thing, and that removes my happy happy joy joy feelings and he wants to do the same thing. Alas this means that the Muricans are trying to steal jobs from Great Brexitan.

I guess all I can do now is go to Canada, where is that immigration portal.

In Trump friendly Texas...

A company called Idera bought another called Embarcadero (home of what remained of the once mighty Borland products), fired the US developers (also closed the Spanish office), and outsourced all products development to East Europe or somewhere alike.

And wasn't in Atlanta where a bank existing IT staff was replaced with cheap employees from India, whom the fired people were "forced" to train also?

It was lack of local skills, or simply greed to lower costs while keeping the same prices?

Maybe there are some reasons - guts ones maybe, but they count too - why so many people voted someone like Trump, despite the man and the havoc he could lead to? Scared people are known to make the wrong choice.

It happened in Europe one century ago, it's happening again. And then too there were warnings and sensible advices. Utterly ignored by the ruling class in charge, until it was too late.

What the hell Register??

Hold the phone?!?! Who said local IT resources are LESS SKILLED?? Can you put some logic and - coughFACTScough behind that particular little cherry please??

All my outsource dealings have involved a dramatic LOSS of skillset and talent as work shifted offshore (to India mostly).

I have no problem with gearing back the corrupt H1-B program

Amazingly enough, the American government is in place principally to promote policies that benefit Americans. And I personally don't deny foreign governments the right to do the same for their own people. So yes to more domestic hiring of IT workers, even if the prices go up a little.

Plus we are going to need more local IT jobs when things like self-driving cars and trucks start appearing and throwing the huge numbers of professional drivers out of work. I don't object to the self-driving vehicles, having drivers that don't get tired and need pitstops makes a lot of sense. However, we will need to do something for the current drivers, and maybe some can be retrained to lower-level IT jobs, and we can move the people currently in those lower-level jobs up the ladder a little, and so on.

"it's difficult..."

"...to know what words were intended simply to score points and grab the sound bite and which was actual policy in the making"

It's not difficult.

He has said, is saying, and will say anything, anything at all, which serves his sole purpose, the aggrandizement of Donald Trump, or what he perceives as serving thus.

If half an hour later saying the opposite will serve that purpose -- well, he's proud to be a dynamic businessman, right?

Unless of course you count the Mexican Wall as a "policy in the making".

Strawmanning

What is Gavin Clarke getting at with Dell and EMC? They're honorary members of Silicon Valley even if their headquarters are elsewhere. Why don't we make RAM and SSDs domestically anymore? We damn well should.

I don't mind paying import duty. It's arguably the least regressive, least intrusive, most enforceable form of taxation. As long as income/sales/VAT taxes are cut or eliminated to compensate.

As for Trump, I'll withhold judgement. He's a wildcard. He could like Nixon, like Carter... or like Reagan.

The real action is not what the US does or doesn't do. I would definitely be watching out for major geopolitical realignments as the main consequence.

race to the bottom

Cheapest man(woman) gets hired.

If Trump's going to put a tariff on foreign goods, he has to put a tariff on foreign workers.

A fair amount would be the amount of money taken out of the US economy by a foreign worker.

Especially taking into account further cash recirculation in the local economy which would be lost with a foreign worker.

This will encourage employers to re-skill the local workforce.

It is important to remember...

...that if you want to sell your product at a profit the people who buy your product need to be willing to pay more than it cost to make it.

If you want to manufacture using staff in the same market in which you sell then you have to accept that your product has to be high value - such that people might be willing to spend the next 4 years paying for it - or that your product will be niche - you are going to use your lower classes to build something just for your upper classes.

The way you "democratise" production is to push your costs into a market with relatively low input costs - at least compared to the market you are trying to sell into. Of course this is just another version of the niche method, above, only you are using the worlds lower classes to build for the worlds upper classes (your lower/middle/upper class).

Maybe it is a weakness with consumerism - as soon as you create a world where everyone reckons they need a 100" curved flatscreen TV and this year's XBOX you create a situation where the ONLY thing you can do is pump money outside of that "sphere of need" to produce it at costs that can be borne by people inside the sphere.

Sadly, when you attack consumerism, you also attack the source of your (relative to others in the world) comfort. "If we aren't selling XBOXes we don't need XBOX sales and support staff, so sack 'em".

Unless you are living by barter in an agrarian wonderland - where nature does the value-adding for you - you NEED for the things you need to be made somewhere cheap so that the costs of your needs can be less than whatever it is that you make. If you aren't making enough money you need to either sell high value products in your own market at low turnaround (which in the long term is a zero sum game), encourage everyone in your market to crank up their debt like a sonofabitch and consume your products at a rate that can support you and your costs (which is a great way to become indentured to financial institutions), or make a product that appeals to a niche market wealthier or vaster than you (which NEEDS you to be dynamic and imaginative and to not keep obsessing about trying to skew the markets oblivious to the fact that anything you do will come back and bite you in the arse)

Its physics. Trump is trying to sell a perpetual motion machine and the US just bought in. Which is not to say that Hillary is necessarily better. Or any other country, particularly. World is not flat, the syphon will not keep filling itself, and MC Escher was not an economist.

Domestic employees

To get around that, firms will need to build infrastructure in the US and take on, presumably, less skilled and more expensive domestic employees.

Here's a novel concept for American companies: train your staff in new skills instead of treating them like disposable assets.

disenfranchised lash out in anger, result is nothing good

Like Brexit it really doesn't matter how angry or desperate the "ignored" get, the minorites retain control and the ability to continue ignoring them.

This is the ultimate problem with popular democracy, people believe that they can vote for "cake today" without thought for tomorrow. For years they voted for instant gratification at the cost of the "common" wealth and now the coffers are empty and the people in control are going to continue "ignoring" them to save themselves.

It doesn't matter how many gross loud mouthed retards the "ignored" vote into office because that is not where the power is held. The real power is safely held where no vote can reach because the "ignored" happily already voted for things to be that way.

To the ignored, yes it is true that companies have been allowed to outsource everything they could to poorer countries and still trade at home without penalty but now it is too late to change the tide. Yes it is also true that cheap labour has been intentionally imported to lower wages along with new laws enacted to prevent the aboriginals from grouping together to oppose the influx again to late to change.

It is all true but so is the fact that the "ignored" were happily ignoring it when they had the chance to prevent it. The companies and the minorities that control them hold the power and whomever you now vote in will continue to work for their interests over yours. You had your chance to prevent all of this but voted for "cake today" instead. So now the coffers are empty and the bill for your years of cake needs paying the "ignored" want to stamp their foot and say it is everyone elses fault. Well welcome to democracy, there never was such thing as a free lunch no matter how much you vote for it, the bill always needs to be paid by someone and this time it is you.

.

Um Apple licenses the ARM ISA but designs its own chips, doesn't it?

It's all international now

Trump doesn't seem to get that the tech industry is just so globalised now and there's little he can do to change that. While it is admirable from a US viewpoint to force the likes of Apple, Microsoft and Dell to employ more US citizens and make more products in the States, he doesn't realise that the US is just a increasingly smaller part of the global marketplace.

What happens when he tries to turn the screws to force these companies to comply? They can simply up-sticks and move their HQs to the EU or one of the new emerging mega-markets such as India or China. Tech companies don't need to stay anchored in one country anymore.

Exporting imports and jobs.

When I was a kid I noted how US toy companies imported Japanese components and complete products, gave them a US brand and sold them on to Europe.

Avoiding high wage economies seemed smart to me as, doubtless, the greater part of what I paid was pocketed by the brand's owners. But it also seemed inefficient, as US products tended to be more expensive than European ones, let alone those imported directly from the Far East.

To the present. Virtually none of the IT companies make anything in their home countries. This doesn't seem to lead to cost savings for users -- as Apple's amusing prices demonstrate.Thus the inevitable rise of Far Eastern brands, doubtless building on skills and infrastructure and economies of scale facilitated by supplying US companies.

To take a more prosaic example -- Levi's originally supplied the UK market from factories in the US. The price -- about three times that of UK brand Lee Cooper -- seemed reasonable for a better-made product and a tangible authenticity. Later, production was in Scotland and product quality remained, but one could still buy US-made Levi's when holidaying in the States where, ironically, they cost less than in the UK.

More recently Levi's has started supplying even the US market from Mexico and the world market from factories in Pakistan, Egypt, Bangladesh, Poland and more. Unsurprisingly this has diluted the brand (and, I think, quality) and provides little incentive for customers to pay more for jeans possibly made in the same factories as those sold under cheaper labels.

Moving manufacturing back to the US sounds attractive. The alternative is to continue concentrating wealth in the hands of the brand owners, to deprive the home market of incomes with which to pay for products -- and to encourage competition from abroad.

So if you are a US company manufacturing in abroad you are going to be hit with a 35% tax on importing to the US. So being a US company makes you 35% less competative.

Solution?

In Trump world you make huge investments in plant/workers etc etc to avoid the tariff, this would potentially cost billions.

Or

You move your headquarters overseas, I am sure many small countries will welcome them. This would cost approx, sod all in comparison to above.

I am not sure that this is what Trump had in mind though.

not another brexit dig?

Two comments - sterling had to fall - we have the highest current account deficit in the developed world. Brexit was an excuse to do what should have been done years ago.

And why should US workers be more unskilled? Less experienced perhaps but they can be trained, much like the overseas workers were. The US went abroad not because overseas were skilled but because they were cheap and that allowed higher margins and better profits.

There was an interview with one of the Apple execs, I think it was with Tim Cook while he was still COO where he explained why it's virtually impossible to manufacture the iphone in US regardless of the cost implications.

Basically it boils down to lack of low skilled labour, not high skilled labour. As in the past couple of decades the "Western" culture is driving the youth towards higher and higher education and white collar jobs, while slowly moving production to the "Developing" countries for various reasons like cost and environmental impacts. He came up with some numbers in 10'000s of people needed for the assembly plants alone.

Another factor is the supply chain, where in China/Taiwan the factory that produces the semiconductor components is just "down the road" from the ones producing 90% of the other components like the metal/glass body and the tiny screws.

Another factor is the total "out of touch" of the American sub-contractors/suppliers, that in the case of the Ipnone 4 "revolutionary" glass body quoted 6+ months to come up with a prototype. Their Chinese/Taiwanese counterparts took days to come up with a viable prototype.

ah ... economics

Here's how it was explained to me (it was late, the pub was about to close, so the economist doing the explaining had to use some heroic simplificatins, but still ..)

Basically, it's about the consumers. If everyone in the state has a good job, they can afford to buy stuff. If company A moves its operations offshore, but continues to sell stuff within the state it makes a profit, because its goods are cheaper. However, the pool of available consumers has shrunk by the number of jobs moved offshore.

Currently the US is in a position where the consumer pool is shrinking as more and more companies move jobs offshore and try to sell to the diminishing number of people who have good jobs within the state. (Not a lot of people are buying stuff in the rust belt right now) Everyone knows that the way to stop this impoverishment of the nation is to stop offshoring. But any individual company that tries this will be broken by the competition. It has to be the government.

It's rather like raising the minimum wage - when this happens there's more money going around (poor people spend money, the rich bank it). However, no single business can unilaterally raise wages and stay competitive.

Some economic actions have to be done by the gubmint for the common good.Sort of government by the people for the people ...?