Economic genius

As he had done previously, Trump tweets as if it is other countries that have to pay tariffs to the US:

I would love to know the percentage of his "base" which thinks this is how tariffs work. 

I would also love to know how any economist (hello, Trump cultist Steve Kates) manages to excuse such lack of knowledge which is, well, about as basic a fact of economic and trade policy as you can get.   Can't any economics adviser get it into the Trump skull that he's making himself look foolish by continually giving the impression that he thinks other countries pay the tariff?

In other, tariff related news, I was interested to read Yglesias's column at Vox suggesting that Apple's problems in China are perhaps not all that tariff related:

Of course, this assumes that Trump’s saber-rattling and tariffs are the real source of Apple’s China sales woes.

There’s some reason to doubt that. After all, in May 2017, before any of this trade stuff was heating up, technology analyst Ben Thompson predicted Apple would suffer iPhone XS sales problems in China, not because of trade but because of WeChat. Chinese people use WeChat for everything, which makes smartphone operating systems less important:

Connie Chan of Andreessen Horowitz tried to explain in 2015 just how integrated WeChat is into the daily lives of nearly 900 million Chinese, and that integration has only grown since then: every aspect of a typical Chinese person’s life, not just online but also off is conducted through a single app (and, to the extent other apps are used, they are often games promoted through WeChat).

There is nothing in any other country that is comparable, particularly the Facebook properties (Facebook, Messenger, and WhatsApp) to which WeChat is commonly compared. All of those are about communication or wasting time: WeChat is that, but it is also for reading news, for hailing taxis, for paying for lunch (try and pay with cash for lunch, and you’ll look like a luddite), for accessing government resources, for business. For all intents and purposes WeChat is your phone, and to a far greater extent in China than anywhere else, your phone is everything.

Whether you own an Android phone or an iPhone, if you’re in China, you are using the same WeChat app to do basically everything. Outside of China, Apple’s sales proposition is phone hardware and a unique operating system. In China, it’s really just the hardware. Thompson predicted this would spell trouble for Apple whenever it tried to market a phone in China that didn’t look new. And right now Apple is trying to market the iPhone XS, a phone that looks identical to the iPhone X.

I did notice on my short holiday to Singapore and Malaysia that Samsung and (more surprisingly) Oppo had a very big store front presence in those countries.  Lots of posters for a new Huawei phone in the Singapore MRT stations, too.  

Yes, it seems Apple has lost the innovation edge.

Update:  a slightly more detailed explanation of the effect of tariffs from Business Insider, just so I can't be accused of not understanding that tariffs may affect Chinese trader's profits indirectly:

“A tariff is a tax on imported goods. Despite what the President says, it is almost always paid directly by the importer (usually a domestic firm), and never by the exporting country,” Gleckman wrote. “Thus, if the US imposes a tariff on Chinese televisions, the duty is paid to the US Customs and Border Protection Service at the border by a US broker representing a US importer, say, Costco.”

Facing a higher cost for the imported goods, US importers can decide to either absorb the increased costs into their margins – thus lowering profits and possibly forcing cost cuts elsewhere – or pass on the cost increases on to consumers to make up the difference.

“A business will, if it can, pass its higher after-tax costs on to consumers,” Gleckman wrote. “Thus, the price of Chinese TVs sold in the US may rise rapidly.”

So while the Treasury Department may be collecting more tax revenue because of the tariffs, most of the money is ultimately coming from US businesses and American consumers, rather than from China.

Ian Shepherdson, the chief economist at Pantheon Macroeconomics, highlighted this problem in a December note to clients after Trump’s tweet in which he dubbed himself “Tariff Man.” The economist said some Chinese exporters may be forced to take lower margins to get their product to the US, but also asserted that American consumers would be the biggest losers.

“Tariffs are a tax on consumers, primarily, though some of the hit might be borne by Chinese exporters, forced to accept lower margins. But for the president to boast that the U.S. is ‘taking in billions’ on tariffs makes no sense at all,” Shepherdson wrote. “The ostensible objective of the tariffs is to force China to negotiate a new trading relationship with the US, not to raise money – from U.S. consumers! – for the federal government.”