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Hey, Trump Tech Boosters, What About China Tariffs?

Dan Jones
1/6/2017
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It has been fascinating to listen to executives from US mobile operators talk about how a Trump administration's corporate tax cuts and potential light regulatory touch could be great for the wireless industry over the last few weeks.

Now, I'm no economist -- although I did fall asleep during economics lessons in college quite frequently -- but being all happy-clappy about Trump's impact on telecoms seems to be only looking at one side of the picture to me. Sure, big service providers might be able to swallow smaller ones and pump bigly dividends back at shareholders. But, as the old song says: Is that all there is?

Well, I don't think so, at least not in this case. See, I haven't heard service provider execs talk about tariffs on Chinese manufacturing operations, which could make smartphones much more expensive.

Smartphones: The very lifeblood that has fueled the boom in mobile communications since the iPhone arrived in 2007 in the US, and before that in Europe and Japan. And they're largely manufactured in China.

Trump has not only talked about imposing tariffs on China but also named Peter Navarro -- who lives to take a poke at China -- to oversee US trade policy. So, ya know, it surely seems like tariffs on Chinese-made goods could be a thing. We really don't know for sure quite yet. (See Top 5 Tech Trump Expectations for 2017.)

So, why don't US wireless service providers talk about that aspect of the brave new Trumpian world? I have a little theory. The president-elect has demonstrated that he can knock stocks down with just a tweet. So maybe it is just best for operators to keep in his good books and say nothing?

Let me know what you think in the comments section below. Doesn't worry me, by the way: I don't own stocks in anything I write about.

— Dan Jones, Mobile Editor, Light Reading

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DanJones
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DanJones,
User Rank: Blogger
1/24/2017 | 10:34:01 AM
Just to square the circle on this...
So the TPP is officially dead.

This makes -- from what I've read -- higher tariffs on AsiaPac imports and exports highly likely.

See: http://www.smh.com.au/federal-politics/political-news/the-slow-painful-death-of-the-12country-transpacific-partnership-20170123-gtxfbk.html

Meanwhile, Foxconn says it *may* build a factory in the US but no promises!

https://www.theguardian.com/technology/2017/jan/23/foxconn-american-factory-plans-trump

Yet automation is still the looming question mark over manufacturing jobs the world over. No one -- not Trump, not Clinton, nor Saunders -- even talked about that. I'm not convinced a 1950s manufacturing economy can recreated whatever.
DanJones
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DanJones,
User Rank: Blogger
1/11/2017 | 1:38:33 PM
Re: Listening in on Trump's press conference....
Key takeaway for telecoms biz: Trump didn't let up or back down on the concept of using tariffs as a tool of political persuasion. In this case to prevent companies moving jobs overseas, but that could be very relevant to operators.
mendyk
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mendyk,
User Rank: Light Sabre
1/11/2017 | 11:46:17 AM
Re: Listening in on Trump's press conference....
Sad!
DanJones
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DanJones,
User Rank: Blogger
1/11/2017 | 11:01:13 AM
Listening in on Trump's press conference....
Listening in on Trump's press conference at 11pm just in case he says anything relevant, not sure tariffs will be top of mind though!
DanJones
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DanJones,
User Rank: Blogger
1/10/2017 | 1:29:01 AM
Re: Good point, well made
Hahahahaha, you've clearly never met Carol Wilson! No seriously, I take your point though, even assembling the iPhone in the US would require changes in logistics, and probably unforseen extra costs. Although it occurs to me that the new guy at the EPA could be so Lassiez Faire that maybe he would bring more silicon fab plants back to the US, they would take years to build though.
TV Monitor
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TV Monitor,
User Rank: Light Sabre
1/9/2017 | 7:14:28 PM
Re: Good point, well made
Dan Jones

The real hurdle to US production is labor.

The reason the production cost in China is low is because of flexible hours; ie Chinese Foxconn and Pegatron workers will work upto 100 hours/week during the launch window period to meet the demand, then scale down to 50 hours/week when demand drops without hiring/firing workers.

Making Americans work 100 hours/week to meet the production quota is not possible, so Apple needs to have a longer production lead time to build a launch inventory, and this adds to cost.
DanJones
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DanJones,
User Rank: Blogger
1/9/2017 | 12:45:33 PM
Re: Good point, well made
If they can find facilities to assemble it, I would expect more shortages and delays too. But yeah locally sourced components probably aren't happening.
TV Monitor
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TV Monitor,
User Rank: Light Sabre
1/9/2017 | 11:54:28 AM
Re: Good point, well made
DanJones

If just the assembly is moved to the US, then $50 more.

If Apple chooses to move major component production to the US, then a lot more.
DanJones
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DanJones,
User Rank: Blogger
1/9/2017 | 9:57:38 AM
Re: Good point, well made
Wonder how much a US-made iPhone would cost?
danielcawrey
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danielcawrey,
User Rank: Light Sabre
1/7/2017 | 11:53:17 PM
Re: Good point, well made
We're certainly seeing companies really think about where they make products these days. Apple is going to be one of those, even if most of these devices are slated to be made by robots in the very near future. 
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