It’s True, The iPhone Increases The US Trade Deficit – But How?

It’s entirely true that the iPhone, Apple’s practice of building it in China, increases the US trade deficit. But how and by how much is something worth examining at a greater level of detail. The answer being that it’s very much less than you think:

How the iPhone widens the US trade deficit with China: The case of the iPhone X
Yuqing Xing 11 November 2019

In order to pursue ‘fair trade’, the Trump administration has imposed a punitive 25% tariff on $250 billion’s worth of Chinese goods.…

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Tesla Shows Why Keynesian Demand Stimulus Through Infrastructure Doesn’t Work

Let us, just for the sake of argument, agree with Keynesian economists. It is possible for the economy to get stuck at a non-optimal equilibrium. Government can then – should then – shock the economy to an optimal equilibrium through intervention.

The underlying method here being to stimulate demand in the economy. This involves increasing the budget deficit (for MMT types, print more money and spend it) by either spending more money or cutting taxes. The usual preference is to go build infrastructure because multipliers.…

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China Should Slap Down Hong Kong Because Economic Liberty

The latest from British academia is that China should slap down on the freedoms of Hong Kong because of the economic liberty the place enjoys.

This is not a joke by the way, nor is it an unkind reading of the point being made. It is the point being made:

Protests in Hong Kong have captured the world’s attention in recent weeks, with demonstrators closing streets and the airport, and Chinese forces amassing near the border with a none too subtle threat of violent reprisal.

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Possession Of A Hong Kong Passport Should Mean Residence Rights In The UK

Matt Kilcoyne is entirely correct here in The Times. We said that when we handed over Hong Kong we’d be guaranteeing, as far as we were able, the rights contained within the agreement. Those rights are rather under threat at present, we must do something. As we’ve not enough gunboats these days – nor opium – we’ll need to do something else:

Nearly 200,000 Hong Kong citizens are British nationals. But this is an empty citizenship; they cannot move here, live here or study here.

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Apple’s iPhone Explains Why Trump Is Wrong About Tariffs, Trade And China

As innumerable of us have explained over the years there’s nothing wrong with a trade deficit anyway. But when that deficit is being wrongly counted anyway it’s even more trivial. Apple’s iPhone is used here as an example of why that deficit with China just isn’t what people seem to think it is:

The guts of an Apple iPhone show exactly what Trump gets wrong about trade

Crack open an iPhone and you’ll begin to see why President Donald Trump’s ongoing trade war with China doesn’t make sense.…

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Deary Lordy Us – iPhone Rumour Machine Grinds Into Gear Again

It’s that time of the year we’re afraid – the iPhone rumour machine is grinding into gear. We’ve now got the entire summer of speculation about what, when, which price, leaks, rumours and flat out lies over what Apple will and won’t announce as the iPhone XI to look forward to.

Some of us actually started in this journalism thing before there even was an iPhone so we’ve rather seen this all before. The simple truth being that Apple will, at some point, release something mildly different from what they already sell.…

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China’s Rare Earth Threat Isn’t As Terrifying As They – Or We – Think

Reports are that China is considering using its “rare earth weapon” in the trade war with the United States. This weapon is in fact rather less of a terror than either they or we think. If they actually use it the end result will be – after a bit of chaos and disruption – that China no longer has the rare earth weapon.

After all, that is what did happen last time they tried this and yes, history does repeat itself just like a bad burger and onions.…

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China’s Power Over The Rare Earth Market Is A Lot Less Than You Might Think

The last time China tried to throw its weight around in the rare earths market it all rather backfired. As I predicted it would at the time in fact:

China’s Tried This Before Of Course
Another reason to think they’ll tread carefully is that China has tried this before, back in 2010. And as I pointed out back then – while it was still happening – it wasn’t going to work: If rare earths are so precious, why isn’t the United States working harder to collect them?

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China Can’t Actually Dump Their Treasuries To Punish The US

We all know that the US owes $16 trillion and change to everyone else. Or at least their government does. We also know that China owns perhaps $1.1 trillion of this. So, if China got pissed they could just dump all of that and thereby cause problems for, punish, the US?

Well, no, that’s not really how it works with sovereigns and bonds’n’loans. It’s the sovereign who can tell the creditor to go away, not the other way around.…

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So, Who Pays Trump’s Tariffs On China? Americans, Obviously And Of Course

One of the greatest failures of understanding in trade economics is who is it that actually carries the burden of tariffs. Who is it that actually pays them?

Donald Trump is insisting that it’s all China paying those tariffs on Chinese produced goods which are then exported to the United States. Which, of course, it ain’t. But he’s saying it:

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