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How does that dodge the tariffs? (Legally) Let's say I'm Apple. I make MacPro's in Ft. Worth, Texas. The parts come from China. I now have to pay 25% more on

How does that dodge the tariffs? (Legally) Let's say I'm Apple. I make MacPro's in Ft. Worth, Texas. The parts come from China. I now have to pay 25% more on those parts. However, since I'm Apple, I have manufactures making iPhones in China. So rationally, my best bet is to shut down my US based plant in Texas and move MacPro manufacturing to one of my factories in China. That way I legally dodge the tariffs since the finished MacPros are NOT taxed. While this is good for China, and a net zero for Apple, it kind of sucks for the poor American workers in Texas who are now out of a job.

will_brown 8y ago
Say you are Apple... You create a Foreign Trade Zone, ship your components there and manufacture there...you don’t pay tariffs on those Chinese components. Now the idea with political cronies/tech start ups that can raise SV funding, they will create one and turn around and offer manufacturers the opportunity to use the zone for their manufacturing (a la the Uber of Foreign Trade Zone/Free Trade Zone) Edit: Just checked, and as one might expect Apple already operates out of Foreign Trade Zones
- odorousrex 8y ago
  That is actually rather clever, and will probably work for many smaller US manufacturers but it will still cause them to have to raise their prices slightly, as there is now another middle man they have to pay. However enterprises like Apple will still find it cheaper to move to China. VC may be reluctant to invest in such startups due to the fact that the current administration has been, how shall we put it...inconsistent? They are just as likely to revoke the tariffs in a month as they are to change the goods covered under it or expand it. Either change could make such a startup completely obsolete in no time at all.
- seanmcdirmid 8y ago
  I don’t think the USA has SEZs like China does.

will_brown 8y ago

Say you are Apple... You create a Foreign Trade Zone, ship your components there and manufacture there...you don’t pay tariffs on those Chinese components. Now the idea with political cronies/tech start ups that can raise SV funding, they will create one and turn around and offer manufacturers the opportunity to use the zone for their manufacturing (a la the Uber of Foreign Trade Zone/Free Trade Zone) Edit: Just checked, and as one might expect Apple already operates out of Foreign Trade Zones

odorousrex 8y ago
That is actually rather clever, and will probably work for many smaller US manufacturers but it will still cause them to have to raise their prices slightly, as there is now another middle man they have to pay. However enterprises like Apple will still find it cheaper to move to China. VC may be reluctant to invest in such startups due to the fact that the current administration has been, how shall we put it...inconsistent? They are just as likely to revoke the tariffs in a month as they are to change the goods covered under it or expand it. Either change could make such a startup completely obsolete in no time at all.
seanmcdirmid 8y ago
I don’t think the USA has SEZs like China does.