I’m going on NewsNation this morning (8/27), talking about the tariffs the US is imposing on India starting today as well as how Apple skirted (or tried to I guess?) the whole tariff thing by moving some of their production to India in advance.
On to the talking points!
India Tariffs Take Effect
It’s useful to start with a baseline: how much do we import from India, anyway?
Answer: about $128.9 billion worth of stuff goods and services
What are we importing from India?
A whole bunch of stuff, really. Electronic equipment, precious stones, pharmaceutical products, machinery, fuels, textiles… it kind of runs the gamut.
How much are we exporting to India?
About $83.3 billion worth of goods and services.
So really… for all we’re carping about here, this just isn’t that that many dollars worth of stuff, especially compared to our GDP, which is just shy of $30 trillion.
However, India remains an emerging market and harming access to their market today will have repercussions in the future.
From a geopolitical standpoint, these tariffs are being imposed to try to stem their purchase of Russian oil and make continuing the war more difficult for Putin.
Ironically, this move might just push India to side more with Russia rather than less.
It will also push them to deal (even more) with, e.g. China, a country that is also looking to shift trade flows away from the US.
This all just follows a pattern of pushing trade partners away from us.
Even if the dollar figure is small and, in an isolated case, relatively inconsequential, the fact is that if you keep pushing people away, you’re going to be left standing all alone.
That’s not good.
Apple Getting the Jump on Tariffs
Apple has been moving at least some of their production of iPhones from China to India for years now.
In fact, they announced that most of their iPhones sold this year were manufactured in… India, not China.
In exchange for a promised $100 billion investment in the U.S., Apple is exempted from the new global tariffs.
What does this mean for Apple products made in India? No tariffs. But if the products are made in China, then 20% tariffs (for now).
What’s really interesting is that the WSJ is calling this “protection” from the tariffs.
But tariffs are protectionism. So Apple is being protected from being protected?
It’s almost as if the President actually does understand that tariffs are harmful for American businesses and is “selling” exemptions.
Will this shift supply chains in a meaningful way?
Eh, I’m less optimistic about that.
It’s certainly true that more iPhones are probably going to be assembled in India going forward. But it’s still the case that China is a dominant power in the manufacturing of high precision components and electronics (e.g. iPhone cameras). If China sends these components to India and the final assembly takes place in India, then the iPhone counts as being “from India” even if the overwhelming majority of the components were made in China.
So really, all this hullabaloo is about which country’s people actually put the iPhones together, India or China?
It’s not really about who actually made the iPhone.
Combine all of this with the fact that these tariffs are almost certainly transient in nature and, well, it just doesn’t seem likely.
Are we really to believe that the next administration, whether they be Republican or Democrat, will not rescind at least some of these tariffs through executive order?
What about the court cases that will probably declare IEEPA tariffs to be unconstitutional?zoo