How the iPhone Increases the Trade Deficit

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Attention iPhone users who think their beloved device is only for video chatting,AAngry Birds, and the occasional phone call: it’s also capable of influencing U.S.-China trade relations.

That’s the conclusionAdrawn by two researchers at the Tokyo-based Asian Development Bank Institute, who estimate that Apple’s iPhone 3G added $1.9 billion to America’s trade deficit with China last year.

Why? Apple, which is based in the U.S., designs and owns the iPhone and largely manufactures its parts in a host of Asian and European countries. But traditional trade flow accounting recognizes the iPhone as a Chinese export because China assembles the parts and ships the finished product. China, in other words, receives full credit for an iPhone’s $179 wholesale price even though the assembly and shipping it provides represent a small fraction of the product’s total manufacturing cost.>


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Posted: December 18th, 2010
at 4:20pm by Koookiecrumbles

Categories: apple,cell phones,trade

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