One widely touted solution for current U.S. economic woes is for America to produce more of the high-tech gadgets that the rest of the world craves.
Yet two academic researchers have found that Apple Inc.'s iPhone—one of the most iconic U.S. technology products—actually added $1.9 billion to the U.S. trade deficit with China last year.
How is this possible? Though the iPhone is entirely designed and owned by a U.S. company, and is made largely of parts produced by other countries, it is physically assembled in China. Both countries' trade statistics therefore consider the iPhone a Chinese export to the U.S. So a U.S. consumer who buys what is often considered an American product will add to the U.S. trade deficit with China.
The result is that according to official statistics, "even high-tech products invented by U.S. companies will not increase U.S. exports," as two researchers at the Asian Development Bank Institute in Tokyo, Yuqing Xing and Neal Detert, write in a recent report.
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