- Sources familiar with President Donald Trump’s plans say that he is mulling the idea of imposing tariffs on Chinese tech products.
- If true, it would be another set of tariffs to accompany the ones he put on steel and aluminum last week.
- China would have no choice but to retaliate if these tariffs are imposed, which could have dire consequences for the U.S. economy.
A pair of anonymous sources close to the Trump administration revealed some worrisome news: President Donald Trump is thinking about imposing tariffs on up to $60 billion in Chinese imports, mostly in the tech and telecommunications sectors. Chinese tech companies like Huawei, Xiaomi, and OnePlus would have a tough time breaking into American markets if this were to happen.
Trump made headlines last week when he announced tariffs on aluminum and steel, in an effort to force American industries to get those metals from other American companies. However, it seems that these hypothetical tariffs on Chinese tech are more to punish China for what the administration considers “unfair” business practices, rather than to keep American tech companies working with other American tech companies.
To sell tech products in China, companies have to jump through several hoops that most other countries don’t impose. In some cases, companies must alter their products to accommodate Chinese laws and cultural preferences, as well as hand over intellectual property to the Chinese government. These restrictions are what keeps companies like Google out of China, which ultimately hurts its bottom line.
While Google is not exactly hurting for cash, smaller companies might see a real benefit to working the Chinese market but are unable to do so due to the hardline restrictions. Trump probably thinks that imposing tariffs on tech products (or at least threatening to do so) will sway China to change up its limitations.
However, if the Trump administration pushes tariffs onto Chinese technology products, China would have no choice but to retaliate in some way, perhaps by refusing to work with American companies that use China’s workforce for manufacturing and labor. If that were the case, the American economy would surely take a massive hit, as basic necessities like clothing would undoubtedly get higher prices.
“If this is serious, the Chinese will retaliate. The key question is, does the U.S. retaliate against that retaliation?” asked Derek Scissors, a China trade expert at the American Enterprise Institute.
“We have said many times that China resolutely opposes any kind of unilateral protectionist trade measures,” said Chinese foreign ministry spokesman Lu Kang. “If the United States takes actions that harm China’s interests, China will have to take measures to firmly protect our legitimate rights.”
This news comes on the back of Trump stepping in to stop the proposed deal between Broadcom and Qualcomm. Both businesses are heavily dependent on Chinese labor to manufacture their products, and Broadcom’s association with China is one of the reasons the President squashed the deal. It’s clear that Trump is taking the blunt approach when it comes to China, doing whatever is necessary to keep the United States at the top of the food chain.