How Trump’s trade war has morphed into an attack on global tech supply chain networks

Any company in the world doing business with Chinese tech firm Huawei or its affiliates risks US sanctions, with grave implications for the worldwide supply chain and, as a result, the global economy

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The US flag flies over shipping cranes and containers in Long Beach, California, on March 4. Some see the American exclusion of Huawei as bullying. Photo: AFP

Published: 1:00am, 3 Jun 2019Updated: 1:00am, 3 Jun 2019

US President Donald Trump’s trade wars have “progressed” beyond the stage of simple tariff punches (painful though these can be) to attacks on the central nervous system of global technology trade networks — and that is going to be far more damaging to all concerned, including the US.

Masahiro Kawai, the former dean of the Asian Development Bank Institute, summed up the situation rather well at the T20 think tanks summit in Tokyo last week, when he suggested that the Trump administration “seems to be trying to decouple China from global supply chains”.

A “lot of Japanese companies are moving production out of China”, said Kawai, who is also director general at the Economic Research Institute for Northeast Asia in Japan. Bank of Japan governor and former Asian Development Bank president Haruhiko Kuroda also spoke of the need to survey the situation.

Retreat from the concept of China as the “workshop” or assembly line of the world began when Trump was still doing real-estate deals. Japanese, US and other global manufacturers have been shifting production out of China to places like Vietnam and Bangladesh, or even back home.

But Trump accelerated the process with his tariff wars, slowing the growth of world trade and economic growth in the process. As a leading economist in one multilateral economic organisation put it, “we have now moved from supply chain war version 1 to tech supply chain war version 2”.

The supply chain discussion has, in fact, entered an entirely new dimension with the US decision to add China's multinational technology group Huawei and its affiliates to a list of companies that American firms cannot trade with unless they have a licence.

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