China’s response to the trade war can hit US technology industry where it hurts most
China’s US imports aren’t large enough to match Trump’s tariffs dollar for dollar, but there are other levers available, such as taxes and added regulation on US companies, slowing deal approvals, or boycotts of American products
President Donald Trump’s latest move to ratchet up tariffs on Chinese goods raises the spectre that China could strike back by tripping up US companies doing business in the Asian nation - and tech is especially vulnerable.
On Tuesday, the US said it will impose a 10 per cent tariff on US$200 billion of Chinese-made products, from food to electronics, by August 30. That adds to an already-announced US$50 billion in tariffs that could raise prices on almost half of everything the US buys from China. President Xi Jinping has vowed to strike back.
Combining US corporate revenue in China with exports to the country gives the US a trade surplus of US$20 billion, according to Deutsche Bank. US-based companies that derive the highest proportion of sales in China are dominated by chip makers and other electronics manufacturers, according to data compiled by Bloomberg. Monolithic Power Systems, a San Jose, California-based component maker, tops the list with about 60 per cent of its revenue from China.
China has used non-tariff tactics in the past. South Korean and Japanese companies have been targeted during times of political tension with increased regulation, harsh new consumer safety rules and mass boycotts inspired by China’s state-run media.
Apple only recently staged a comeback in China, one of the company’s most important markets. Tesla just announced plans to build a Chinese assembly plant but still needs to secure approvals and permits.
China is considering delaying merger approvals, The Wall Street Journal reported on Tuesday, citing unnamed Chinese officials. NXP fell as much as 4.7 per cent, the most since June 25. Qualcomm fell 1.6 per cent.