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.

On paper, imports of the popular smartphone and other goods from China look like a big loss to the U.S. The president certainly thinks so and has often cited the massive U.S.-China bilateral trade deficit – US$420 billion in 2018 – as a reason to fight his trade war.

When an iPhone X arrives in the U.S., it adds about $370 – its factory cost – to the deficit. All told, iPhones add tens of billions of dollars a year to the U.S. deficit with China, which is the gap between imports and exports. But, thanks to the globe-spanning supply chains that run through China, trade deficits in the modern economy are not always what they seem.

View the complete June 25 article by Jason Dedrick, Professor of Information Studies at Syracuse University; Greg Linden, Research Associate at the University of California, Berkeley; and Kenneth L. Kraemer, Research Professor of Business at the University of California, Irvine, here.