>> It's something Donald Trump regularly tweets about from his iPhone.>> Trade deficit. Trade deficit. Trade deficit. At least $500 billion.>> A potential trade war is brewing between the US and China, due to a sharp trade inbalance, mainly in tech. But the Apple iPhone is actually a great example of why numbers for America's trade deficit with China may be overblown.
>> Like it says on the box, I was designed by Apple in California.>> The iPhone is US designed and owned, but manufactured in China, like many other global supply chains. The US imported over $70 billion worth of cellphones from the country last year, but in reality, that number isn't accurate.
Because as Adam Jordan explains, these parts come from all over the world.>> China of course is the manufacturing hub for lot of the world's electronics. Both Chinese companies and brands but also brands like Apple in the US. When those phones are finally shipped out of China, all around the world including to the US, well, they don't necessarily reflect the value of where that phone has come from and where the parts have come from.
They put a high number in the exports from China and a big surplus in the US imports.>> The display modules comes from Samsung in South Korea, the memory chips come from Japan's Toshiba, and the chipsets are from America's own Qualcomm. Finally, it's assembled in China by contract manufacturers like Foxconn.
That's only a small fraction of the overall pie, usually around 3 to 6% of the manufacturing cost. But the full amount of $400 per iPhone gets slapped onto China's export tally. China, for its part, reported its 2017 trade surplus with the US as 276 billion, just over a quarter less than the US figure.
But those numbers seem to mean little to Trump, who may be unveiling new tariffs for China this week.