Assignment:
Apple's ‘Very Compelling' Argument Against Tariffs (Micro News for August 17, 2019 - August 23, 2019)
By Riley, Charles
Keywords
comparative advantage, absolute advantage, international trade, free markets
Current News Topic
1 Introductory Concepts
Article Synopsis
Apple CEO Tim Cook met with President Trump about tariffs imposed on Apple products made in China. Cook shared with Trump that the tariffs would harm Apple's ability to compete with its top rival Samsung. Samsung products are made in Korea and other Asian nations not subject to the tariffs. Taxing only Chinese imports places Apple at an unfair advantage.
Trump previously announced plans to place tariffs on another $300 billion of Chinese imports but decided to delay taxes on tech products after that announcement. Import taxes on smartphones, laptops, video game consoles and other technology will not be imposed until December 15 in order to keep from disrupting holiday shopping.
Apple has already suffered from weaker demand for smartphones, particularly in China. The tariff would hit the firm's profits even harder.
After Trump announced a delay in the tariffs on technology Apple stock rose by 3%.
Questions 1
1. Fill in the blank: Tariffs are taxes on _____________ goods.
2. Which of these reasons may be used to justify tariffs?
a. protect domestic producers
b. retaliate against protectionist policies that impact your exports
c. protect strategic manufacturing sectors
d. all of these
3. True or false: Tariffs increase the cost to consumers.
Questions 2
1. Complete this sentence: President Trump recently announced plans to impose tariffs on;
2. Apple's CEO Tim Cook argued that the tariffs placed Apple at a competitive disadvantage relative to;
a. Samsung
b. Toyota
c. Dell
d. IBM
3. True or false: President Trump postponed tariffs on some electronic goods until December 15, 2019.
Discussion Questions 3
1. Why are trade wars harmful to all parties involved?
NOTE TO INSTRUCTOR: Discuss some of the groups harmed by trade wars.
2. What was Apple's ‘compelling argument' against tariffs?
NOTE TO INSTRUCTOR: Debate this argument in class. Is it a good argument to suspend tariffs?
3. How does comparative advantage work to provide higher standards of living for all parties?
NOTE TO INSTRUCTOR: Discuss who might benefit from the tariffs?