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How the iPhone widens the US trade deficit with China: The case of the iPhone X

  • Paper
  • Nov 11, 2019
  • #Intangibleasset #China #Trade
Yuqing Xing
@YuqingXing
(Author)
cepr.org
Read on cepr.org
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In order to pursue ‘fair trade’, the Trump administration has imposed a punitive 25% tariff on $250 billion’s worth of Chinese goods. However, conventional trade statistics greatly... Show More

In order to pursue ‘fair trade’, the Trump administration has imposed a punitive 25% tariff on $250 billion’s worth of Chinese goods. However, conventional trade statistics greatly exaggerate the US trade deficit with China. This column uses the iPhone as an example to demonstrate how the trade deficit is inflated and why value-added should be used to assess the bilateral trade balance. If multinational enterprises, including Apple, shift part of their value chains out of China, China may no longer play a central role in global value chains targeting the US market. Depreciation of the yuan will be insufficient to counter the effect. 

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Laurent Ferrara @FerraraLaurent · Nov 15, 2019
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Very clear post to understand why the US trade deficit with China is overestimated, using the Iphone X example. As a 25% rise in tariffs cannot be compensated by reasonable yuan depreciation, MNEs are likely to shift part of value chains out of China @voxeu @BaldwinRE
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