this post was submitted on 09 Apr 2025
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But other businesses only have distributions centers in the US. So they import to US, pay tarrifs, and then I can buy from them in Europe, so indirectly I also paid the tarrifs. Even though product was made in China and I live in Europe.
If anything good comes from this, it’ll be reforming that. Even if tariffs were still a couple percentage points instead of based on a formula zero economists endorsed, you shouldn’t be forced to pay (or the companies able to avoid) tariffs by using a distribution center in a third country. It should all be based on country of origin and final destination.
A Chinese (or American) company setting up a factory in Vietnam is an entirely different thing. I’m not talking about that. The product was made in Vietnam and real foreign direct investment happened that’s beneficial to everyone. I just mean logistics hubs should be irrelevant when calculating tariffs.
The “ideal” solution if we must use tariffs would be to take into account where it’s all made but that’s way too complicated to implement and easy to game^1^, unfortunately. An iPhone is assembled in China but using parts from all over Southeast Asia (and elsewhere) and with a substantial portion of the actual value coming from California and the UK. Where is an iPhone really made if a Taiwan Semiconductor fab makes a bespoke processor based on ARM but designed in California? “Made in China” is what’s stamped on the box (actually they put “Made in China, Designed in California).
And that’s just the processor and a few other advanced chips. I think Samsung makes the screens in South Korea based on technology developed in the U.S. by Corning. If Apple wanted to skirt tariffs under that sort of regime, they could plausibly argue that the assembly is worth $10, manufacturing is worth $90, and the design and software are worth $900. I mean, smartphones are commodities now. People use iPhones because they like the software.
Tariffs based on the final step of assembly don’t make sense for complicated products made by multinational companies in the 21st century. The world makes an iPhone. Accounting for it all would be impossible.