- Carlo Allegri/Reuters
In his first address since his victory speech – a two-and-a-half minute YouTube video posted November 21 – President-elect Donald Trump dove right into the issue of trade.
On his first day in office, Trump said, he plans to “issue a notification of intent to withdraw from the Trans-Pacific Partnership, a disaster for our country.”
Free trade teals like the TPP and North American Free Trade Agreement (NAFTA) played a prominent role in Trump’s campaign message. Though the TPP is not yet in effect, Trump has consistently blamed NAFTA and other trade deals for shipping too many jobs overseas and hurting the US economy.
Although there is broad support for increasing US manufacturing power overall, goods made in the US are inevitably more expensive than those created in countries where labor is cheaper, such as China, Vietnam, and Mexico. If the production of popular items like iPhones and sneakers were done domestically rather than abroad, their prices would increase considerably.
Here’s what five of your favorite products would cost if they were American-made.
During his campaign, Trump suggested that his administration could potentially get Apple to build their computers and devices in the US instead of other countries. Nikkei Asian Review reported last week that Apple assembler Foxconn has actually been studying the possibility of moving iPhone production to the US. But a source told Nikkei that the cost of an iPhone would “more than double” if that were to happen.
An evaluation by Marketplace looked into the hypothetical cost of an American-made iPhone, and came up with a similar estimate. If all the components were made in the US, they suggest, that could push the cost up to $600, which would mean the phone could retail for as much as $2000.
According to a different analysis published in the MIT Technology Review, if iPhone assembly were done in the US but the components were still sourced globally, the cost of making phones (currently estimated at about $230) would rise about 5%. However, if the components were made in the US (with raw materials bought on the global market), that would add an additional $30 or $40 to the cost of making the device, an increase that would then be reflected in retail markups.
Dan Panzica, chief analyst at IHS Markit Technology‘s Outsourced Manufacturing Intelligence Service, suggests these estimates all overlook a bigger problem.
“The thing that people miss regarding bringing something that’s a high-volume product like any phone to the US is, Where are you going to get the people?” he says. Panzica, who used to work at Foxconn, estimates that the Chinese workforce required to make the components and assemble the phones totals over 150,000.
“If you take all the people at GE, GM and Ford, it’s still 20% less than at the four Foxconn factories,” he says. “What city could support a factory of 60,000 people?”
Plus, Panzica adds, the infrastructure for these types of electronics was never in the US to begin with, so the concept of bringing it back would actually involve building from scratch the entire manufacturing network that has grown in Asia over the last few decades.
“To rebuild that kind of infrastructure in the US will be really really hard,” he says.
Panzica suggests that clothing costs could increase even more than that of electronics if they were manufactured in the US. For a device like the iPhone, he says, the majority of the cost is in the materials that go into it. But materials for shirts and pants are cheap – the labor makes up a higher portion of the cost of production.
That’s why apparel companies have shipped manufacturing overseas, he says.
“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,” he says. By comparison, IHS’ analysts calculate the labor rate in the US at $25-$30 per hour (a number that takes into account costs beyond an employee’s wages). “So even if there’s an hour worth of labor in a blouse or a men’s shirt, now you’re talking about a $25 buck difference per piece,” he says of the manufacturing cost.
That logic is reflected in “Made in the USA” lines sold by various US clothing companies.
Levi’s “Original fit selvedge jeans” cost around $128. But the selvedge jeans of the same fit from the company’s “Made in the USA” collection, which uses premium denim from Cone Mills of North Carolina, were listed online for $348. (As of writing they’re on sale for $104.90, however.)
JCrew’s Wallace & Barnes raw indigo selvedge jean, which is constructed in the US using denim from Japan’s Nihon Menu mill, are listed at $248. Other raw selvedge pairs for men cost $175.
During his presidential campaign, Donald Trump said in a statement that the US doesn’t make TVs anymore.
“We’d like to make them. We used to make them. You remember Sylvania, RCA. But those days are gone.” Politifact checked this assertion, and found it to be true. All the electronics that go inside TVs, they reported, come from Asia.
Panzica says that the size and shipping costs of TVs lend themselves to near-shoring, a practice in which a company outsources production to a facility closer to its home country.
“There is quite a bit of television assembly in Mexico,” he says.
A few companies, however, are at least assembling the components in the US. The biggest and most well known is Element Electronics, whose televisions are sold at stores like Walmart and Target.
Element’s TVs are actually among the cheapest sets on the market, despite the fact that they’re assembled in Winnsboro, South Carolina. A 42-inch, ultra-high-definition smart TV is currently selling for $329 at Target, which is comparable to the price of a similar Westinghouse model ($299, marked down $449). And a 32-inch Element tv costs $129 (marked down from $179), which is not far from popular low-cost Chinese brand TCL’s 32-inch Roku smart TV, which is listed for $169.
- Facebook/New Balance
A large percentage of footwear is made in Asian countries included in the TPP, and about 97 to 99% of sports footwear that’s sold in the US is made in other countries, according to the pro-trade group Footwear Distributors and Retailers of America.
The TPP would have reduced or eliminated tariffs for shoes imported from Vietnam and other countries, which might have reduced the overall cost of sneakers in the US. Companies like Adidas and Nike, which has 26 footwear factories in Vietnam, supported the trade partnership.
New Balance, however, opposed the deal. On its website, the company boasts that it makes or assembles 4 million pairs of athletic footwear per year in the USA. New Balance labels its domestically made pairs for consumers, which also makes apparent the difference in price between those shoes and the ones made offshore.
New Balance shoes range in price from $65 to $399, but the American-made pairs start at $165 and get as expensive as $399. (The most expensive pair on the New Balance website is indeed made in the US.) That means none of the lowest-priced pairs are manufactured domestically.
A similar contrast is also visible in Reebok’s shoes. The company makes a Postal Express line, which is made in the US and designed specifically to meet the needs of postal workers. But the shoes range from $167-$230, whereas Reebok’s regular athletic footwear costs between $80 and $165.
- AP/Larry French
Many environmentalists opposed the TPP for fears it could increase fossil fuel exports and encourage more extraction of coal, oil and gas, leading to increased emissions. But other trade analysts have suggested 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,” says Joshua Meltzer, a senior fellow in the Global Economy and Development program at the Brookings Institution. “Without the TPP, you don’t have that…So it makes addressing climate change a little more expensive.”
In the case of solar panels, those manufactured domestically are consistently more expensive than those imported from abroad. A 330-watt mono panel from Canadian Solar – which manufactures most of its panels in China and Vietnam – costs 69 cents per watt. SolarWorld, one of the biggest domestic solar panel makers, sells a similar 300-watt mono panel for 85 cents per watt. Considering the typical home uses 7,000 watts of solar power, that difference translates into a price difference of $1,120.
Suniva, a domestic solar panel company based in Atlanta, sells a similar 330-watt mono panel for $1 per watt, which creates an even greater price gap.
Meltzer suggests that future trade agreements could go even further to reduce tariffs on green goods and services or even create subsidies to promote outcomes that are beneficial for the climate.
“There’s never anything wrong with rethinking different approaches to trade. I would not say we’ve got it always right and there aren’t improvements that can be made,” he says, but adds that Trump’s pledges to disrupt free trade could have severe, negative consequences.
“This will be very costly for the US if we do actually go down that path,” he says.