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Wednesday 3 June 2020

Apple finds Trump standing in its way from China to India

Instead of attracting American companies back home, the US president said he'd impose on them a punitive tax if they were to go elsewhere

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US President Donald Trump’s policy that if an American company leaves China, it must move its manufacturing to the country of its origin rather than going elsewhere is coming in the way of India’s plans to woo Apple and other companies that are leaving the communist state because of a severe damage to its supply chains following the coronavirus disease outbreak, which turned into a global pandemic. The US president has threatened Apple and other companies with punitive taxation if they were to leave China but not go back to the United States.

Trump sees this taxation as an “incentive” for companies to return their manufacturing base to his country. The US president believes this is the way to create more jobs in the US. This is part of the president’s programme ‘Make America Great Again’.

Curiously, Trump is not wooing American companies with factories in China; he is instead threatening them, believing that not having to pay the punitive tax would work as an incentive.

Trump has hardened his stand at a time when Apple is considering moving about 20% of its iPhone production capacity in China to India. In addition, it intends to increase its manufacturing revenue through contract manufacturers in India to a worth of about $ 40 billion in the next five years.

When a journalist asked Trump what he thought about Apple moving a significant part of its manufacturing to India to reduce logistical disruptions, the president said, “If they do, you know, we gave Apple a little bit of a break because they’re competing with a company that was a part of a trade deal that we made. So it was a little bit unfair to Apple, but we’re not allowing this anymore.”

“You know if we wanted to put up our own border — like other countries do to us, Apple would build 100 per cent of their product in the United States. That’s the way it would work,” Trump said in the interview.

The COVID outbreak last year hit global supply chains when the Xi Jinping government isolated the Hubei province and brought the Chinese economy to a virtual standstill for a while.

President Trump as much as states on the record that the United States would not do much for the companies to get them back to the US.

Much before the tension in the Sino-American relations over the origin of coronavirus and even before the trade war between the two countries, Trump used to pooh-pooh the companies’ preference for China. He would say that the US should have all the supply chains rather than have them scattered across the world.

But big companies that India is wooing are not American alone. The Indian offer of easy land availability may work for Japanese and South Korean firms that are moving out of China too. Prime Minister Narendra Modi in a recent address had stressed making India a strong part of the global supply chain.

India continues to reform its systems while also carving out a piece of land, the size of Luxembourg, for the companies leaving China. Uttar Pradesh Chief Minister Yogi Adityanath, Gujarat Chief Minister Vijay Rupani and a posse of top-ranking bureaucrats in Tamil Nadu are on the forefront, making various lucrative offers to companies that set-up shop in their respective states.

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