One of the major changes that will happen under the reign of Donald Trump as the newly elected president of the United States is the issue of trade. In his first address since his victory speech, the president-elect dove right into the issue of Trans-Pacific Partnership (TPP).
On his first day in office, Trump plans to “issue a notification of intent to withdraw from the TPP.” According to him, the TPP is “a disaster for our country.” Trump also blames trade deals like the TPP and the NAFTA (North American Free Trade Agreement) for hurting the US economy and shipping too many jobs overseas.
Although there is support for manufacturing power overall, US-made products are more expensive than other countries. This is because products made in countries like Mexico, Vietnam and China have cheaper labor costs. If the production of popular items like iPhones were from the US, their prices would increase considerably.
According to the Business Insider, the following are the top 5 affected products if the US leaves the TPP:
Trump plans to have Apple Inc. build their computers and devices in the US instead of other countries. If this pushes through, the cost of an iPhone would more than double, according to Nikkei Asian Review. If all of the phone’s components were from the US, that could push the cost of up to $600. It means the phone could retail for as much as $2000.
MIT Technology Review reports that the cost of making iPhones would rise 5%. If the assembly were in the US but the components still sourced globally. However, if the components were US-made and raw materials bought globally, that would add an additional $30 or $40 to the cost of making the device.
Dan Panzica, chief analyst at IHS Markit Technology’s Outsourced Manufacturing Intelligence Service, suggests that clothing costs could increase if the US stops outsourcing labor globally. While materials for clothing are cheap, the labor makes up a higher portion of the cost of production.
“If you look at labor rates around some of the really cheap areas, Vietnam is like $2.50, and Bangladesh is like $1.80 an hour,” Panzica said. “So even if there’s an hour worth of labor in a blouse or a men’s shirt, that’s a $25 buck difference per piece.”
Donald Trump said during his presidential campaign that the US doesn’t make TVs anymore. This may be true, according to a Politifact report. The outlet notes that all the electronics that go inside TVs come from Asia. However, Panzica says that the shipping costs and the size of TVs lend themselves to near-shoring. It is a practice in which a company outsources production to a facility closer to its home country.
According to the Footwear Distributors and Retailers of America. 99% of sports footwear sold in the US are from other countries. If the US leaves the TPP, the overall cost of sneakers in the US could increase. Companies like Nike and Adidas benefit largely from the trade partnership, given their numerous footwear factories in Asia.
However, footwear makers New Balance and Rebook pride themselves in making their products in the US. But their American-made pairs tend to become too pricey compared with the ones made offshore.
Joshua Meltzer, a senior fellow in the Global Economy and Development program at the Brookings Institution, suggests that free trade agreements can actually make renewable energy more accessible.
“The TPP specifically did a little bit when it comes to climate — it lowered tariffs significantly on access to climate technologies,” Meltzer said. “Without the TPP, you don’t have that… So it makes addressing climate change a little more expensive.”
Solar panels manufactured domestically are consistently more expensive than those imported from abroad. A Canadian Solar 330-watt mono panel costs 69 cents per watt. The company manufactures most of its panels in China and Vietnam. One of the biggest domestic solar panel makers, SolarWorld, sells a similar 300-watt mono panel for 85 cents per watt. This would translate into a price difference of $1,120, considering the typical home uses 7,000 watts of solar power.
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