4 ms·
Methinks it happens in automobiles too. And higher end/larger electronic items. It comes down to 1)logistical costs, i.e. the cost of shipping a final product
by RaSoJo 14y ago
Methinks it happens in automobiles too. And higher end/larger electronic items.
It comes down to
1)logistical costs, i.e. the cost of shipping a final product v/s shipping parts of the product.
2) Safety/damage rates of the items thus transported
3) Speed of transportation in either formats
With the see-sawing of freight rates, Mr. Cook might be tweaking on the cost benefit analysis.
- rdl 14y agoYou forget 4) duty. that is probably the single biggest one -- sometimes components have a lower tariff rate than assembled final goods, and sometimes it makes sense to import low-value products and do a magic high-value "assembly" step in the country or compact (EU, NAFTA) of sale, if taxes are lower than duty, or if you can make the "assembly" step involve "purchasing and installing software or a license", and thus an expense, but not a tariff-subject item. The ultimate examples being "pressing boxed software". Assemble the box, manuals, etc. in a certain country, add the value during that step in the form of components, with the license not being dutiable, but a boxed software item imported would be. Regulatory arbitrage at its finest. This is pretty much why Apple makes some iPads in Brazil now.
- yen223 14y agoThe article did point out that the requirements for declaring something to be "Assembled in USA" are a lot more stringent.
- rdl 14y agoThe US also has low duties; it's mainly about some other countries, usually in the developing world, which have higher duties and more broken enforcement regimes. Also the US has weird loopholes with some territories or other treaty countries, so you can do less work to make something "made in USA" in some places and some industries than in others (I think Saipan, American Samoa, Puerto Rico have special status)