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Thursday, 10 November 2016 08:09

Trump victory to put screws on US tech multinationals Featured

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While a largely discredited mainstream media scratches its collective head in confusion as it wonders how it got the US public mood so horribly wrong, a few are starting to turn their attention to what the election of Donald J Trump as the 45th US President will mean for US tech corporations. Many are nervous that new boss actually intends to deliver on his promise to bring jobs back home.

During his campaign President-elect Trump made it clear in no uncertain terms that he intends to rebuild his country’s manufacturing industry, which has been largely decimated by years of globalisation and the associated offshoring of local jobs.

Trump wants to see iPhones and cars made in the US instead of China and Mexico and he has stated that US companies that persist in making products overseas for local consumption will face stiff penalties in the form of taxation and tariffs.

As Michael Moore pointed out in his latest film, in a meeting with Ford executives Trump told them flatly that if they made their cars outside the US he would slap a tax on them so that no Americans would buy them. Moore would never admit it but he may be a closet ‘Trumper’.

So what would it mean if iPhones were made in the US instead of China? I don’t know actual figures but for argument sake let’s say that it would add 40% to the enduser retail price.

Would this be a disaster for the company and, more importantly, the consumer? Not necessarily.

Consumers could delay upgrading and keep their phones 40% longer - the excellent Apple products certainly have the necessary longevity.

Apple would have to be content to make slightly less obscene profits but its loyal customer base would not desert it. What’s more the additional relatively well-paid manufacturing jobs created in the US would put money in consumers’ pockets so that they could afford to buy Apple’s premium priced products.

The same thing goes for a myriad of other US tech companies that have shifted manufacturing offshore - HP, Dell, and Cisco for instance.

Could this work or is it just pie in the sky speculation?

As some economists have pointed out, the US still makes things. It makes big complicated things like planes and large weapons used in destroying the infrastructure of defenceless 2nd and 3rd world countries. However, those aren’t the things that consumers use and they don’t put millions of Americans to work.

One thing is for sure, the philosophy that “advanced economies” should necessarily be services based has not proven in practice to be the boon that its advocates would have us believe. This is especially the case when even high level tech services have been globalised, commoditised and shifted offshore.

The digital economy is all well and good but you can’t eat, drive or ride on information. For all his perceived failings, at least Trump appears to recognise this. Whether he will deliver on his platform of reform is another matter.

Meanwhile, perhaps Apple might consider using some of the couple of hundred billion it has in the bank to buy some factory space in the US just in case Trump turns out to be the real deal.

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Stan Beer

 

Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.

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