Lies, Damned Lies, Trade Statistics, and iPhones

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Excellent WSJ piece tonight make the wonky but contrarian case that our current trade statistics do the U.S. a disservice in terms of how things get tallied up for trade surplus/deficit purposes. A snippet:

Trade statistics in both countries consider the iPhone a Chinese export to the U.S., even though it is entirely designed and owned by a U.S. company, and is made largely of parts produced in several Asian and European countries. China’s contribution is the last step—assembling and shipping the phones.

So the entire $178.96 estimated wholesale cost of the shipped phone is credited to China, even though the value of the work performed by the Chinese workers at Hon Hai Precision Industry Co. accounts for just 3.6%, or $6.50, of the total, the researchers calculated in a report published this month.

…If China was credited with producing only its portion of the value of an iPhone, its exports to the U.S. for the same amount of iPhones would be a U.S. trade surplus of $48.1 million, after accounting for the parts U.S. firms contribute.

More here.

[Update] Google’s Hal Varian in 2007 making a similar point using a different study.

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