In a Monday campaign speech at Liberty University in Lynchburg, Va., the front-runner in the Republican presidential race promised to force Apple to return long-lost factory jobs to the United States.
"We have such amazing people in this country: smart, sharp, energetic, they're amazing," Trump said. "I was saying 'make America great again,' and I actually think we can say now, and I really believe this, we're gonna get things coming. We're gonna get Apple to start building their damn computers and things in this country, instead of in other countries."
Most of Apple's products, including the iPhone, are built in China.
Since launching his campaign in June, Trump has repeated his promise of returning jobs to the United States often, although the usual target is Ford Motor Co. (NYSE: F).
In Ford's case, Trump has vowed to slap a punitive 35% tax on every vehicle Ford would import from Mexico. Trump doesn't like Ford's plans to build two new engine and transmission plants in Mexico, although the company has said no U.S. jobs will be lost.
Although Trump didn't specify how he'd get Apple to move its production to the United States, it's safe to assume the same 35% tariff would apply.
Putting aside the practicality of these proposals for a moment, it's easy to see the appeal to a big slice of the electorate. For decades Americans have watched well-paying, middle-class jobs migrate overseas when U.S. factories close.
The statistics are disheartening. Since 1999, the United States has lost 5 million manufacturing jobs, about half of them to China. The current total of 12.3 million manufacturing jobs is 7.3 million lower than the 1979 peak of 19.6 million.
And Donald Trump has raised hopes, saying he can put things right with these tariffs. "We have to or we're not going to have a country left," he said in his Liberty University speech. "Everyone is ripping us."
It would be great if Trump were right. If slapping tariffs on the imported goods of U.S. companies had any chance of bringing back millions of lost manufacturing jobs, the idea would have broad support.
But Trump's plan won't work. It can't work. And I've got four reasons why…
Where the Donald Trump Plan to Bring Jobs Home Goes Wrong
- American Workers Lack the Skills: While cheaper labor is part of the equation in the migration of manufacturing jobs overseas, it's not the only – or in some cases, the most important – factor. Many manufacturing jobs require the sort of vocational skills that few in the United States today want to learn. But China has invested heavily in such vocational training. That's one of the reasons Apple CEO Tim Cook cited when asked last year on the CBS News program "60 Minutes" why Apple builds the iPhone in China. "You can take every tool and die maker in the United States and probably put them in a room that we're currently sitting in. In China, you would have to have multiple football fields," Cook said.
- Automation Took a Lot of Those Jobs: While it's certainly true that many U.S. manufacturing jobs moved to China and other foreign countries, a lot of them simply disappeared as the result of improving technology, particularly in the area of robotics. Take General Motors Co. (NYSE: GM), for example. Back in the 1970s, the automaker employed more than 600,000 workers. Today it employs about 216,000 – and yet turns out more vehicles than ever.
- The American Consumer Would Be Crushed: What Donald Trump doesn't say is that heavy tariffs on imported products would get passed on to the consumer. If implemented as a blanket policy, prices of many products would soar. Earlier this month, Trump told The New York Times he'd impose a 45% tariff on all Chinese imports as part of his bring-the-jobs-home plan. That means the prices of practically everything in Wal-Mart Stores Inc. (NYSE: WMT) and most other retailers would nearly double overnight. Imagine the backlash to that.
- Capitalism Is Brutal – but It's Efficient: Where companies decide to build a factory depends on a number of factors – the cost of labor, the cost of energy, its proximity to the target market, etc. Corporate executives do what makes the most sense and will provide the company with the maximum advantage in the market. That's their responsibility to shareholders. One reason Apple was drawn into using China to build its products was because the bulk of its supply chain is in Asia, for example. Using brute force tariffs to force U.S. corporations to make choices harmful to their bottom lines may end up having a result more unwelcome than outsourced jobs – the companies themselves might move overseas.
"No matter who becomes president, I cannot foresee a scenario where 5 million additional manufacturing jobs … reappear in the U.S. in the decades ahead," economist David Autor of the Massachusetts Institute of Technology told the Associated Press.
The Bottom Line: Donald Trump's latest target in his quest to return lost manufacturing jobs to the United States is tech giant Apple. Few dispute the merits of regaining well-paying factory jobs, but the reality is that they're not coming back. And Trump's plan to use punitive tariffs to force U.S. corporations to bring jobs home not only would fail, it would do more harm than good.
The Markets Will Crash Again: The cracks are already showing. But the impending collapse is also an opportunity. By understanding these five "Super Crash" inevitabilities and making key adjustments, investors can protect their portfolios from the downside while positioning for the upside. This is your last chance to act before it's too late…
- Associated Press: Retake Millions of Jobs from China? Unlikely: Trump's Deal-Making No Match for Economic Forces
- 60 Minutes: What's Next for Apple?
About the Author
Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.