You have probably seen the memes questioning the sense of manufacturing Nike shoes in the USA. Commentators presume Nike will be forced to do so because of the newly announced Tariffs. Are they right? Does US Policy end up taking jobs away from Asian factory workers? Let’s see if we can untangle the issues and shed some light on Nike’s likely strategy.
Everyone has an opinion on the tariffs, their purpose, whether they make sense, and ultimately, their effects. How can we navigate these issues effectively when so much political emotion is wrapped in those opinions? Returning to first principles and a grounding in the basics helps us all sort out the signal from the noise.
The latest news reports suggest Apple intends to source US phone supply in India to reduce tariff effects. Naturally, this news has attracted negative analyst coverage. The most bearish says it probably won’t work well and reduced his stock price target to the lowest of all analysts. Is he right, or missing the big picture?
US policymakers regularly criticize Europe’s Value-Added Tax (VAT) refund system, arguing it tilts trade dynamics in favor of European producers. European counterparts counter with a World Trade Organization (WTO) ruling that deems VAT refunds for exporters non-subsidies, suggesting compliance with global trade norms. Yet, does technical legality equate to equitable outcomes? Can the system lead to undesirable effects?
The market assumed Apple was in trouble with Tariffs. At one point last week, it traded as low as $172 per share, a 34% drop from its peak. That price drop is building in massive pessimism around the business. Here is why that doomsday view is overdone.
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