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Tech's Cold War is warming up.
President Donald Trump is preparing a series of efforts to limit China's ability to invest in the US technology sector, suggested several media outlets, placing the sector at the center of the trade war between Washington and Beijing.
The Wall Street Journal reported Monday that the president will use the 1977 International Economic Empowerment Act to invoke national security concerns to limit the ability of Chinese or Chinese companies to invest in US companies related to US technology "industrially significant". The reports also indicated that the US Treasury and Commerce Departments, as well as the National Security Council, were preparing plans to introduce "enhanced" export controls, which could be unveiled as early as this week, to prevent the American technology from China.
The reports followed a tweet on Sunday from the president who said the United States would respond "more than reciprocity" to trading partners who impose what he called "artificial" barriers to US companies.
The United States insists that all countries that have placed artificial barriers and tariffs on goods entering their country, remove these Barriers and Tariffs or meet more than the US Trade Reciprocity must be fair and no longer one way!
– Donald J. Trump (@realDonaldTrump) June 24, 2018
Apple Plus shares (AAPL) held by Apple Inc. were marked 1.04% down on Monday before market opening, indicating an opening price of $ 183.01 each, a move that would bring the post G-7 summit back to about 5.75%. The S & P 500 index of information technology, benchmark of the US technology sector, has dropped 1.86% since the president announced a tighter dividing line toward the gathering of leaders of the world's largest economies.
The Chinese government views the ICT sector as a "strategic sector" in which it has invested significant capital and influence on the part of the state (information and communication technology companies).
The study found that seven major US technology companies – Hewlett Packard (HP), IBM (IBM), Dell Inc. (DELL), Cisco Systems Inc. (CSCO), Unisys Corp (ISU), Microsoft Corp (MSFT) and Intel Inc (INTC) – source more than half of their products and components from China.
US technology companies, including Apple, which has sold more iPhones in China than in the United States in the last three years and generated 20% of its annual revenue of nearly $ 200 billion, have important links with Mainland China and Taiwan. Foxconn, on the other hand, relies on its contract with Apple – the last of which reportedly earned $ 7.5 billion – for more than half of its revenue.
According to a study by the US-China Economic and Security Control Commission released earlier this year, China's inclusion in the global technology supply chain was a "national strategy for risk management." supply chain US Federal Information and Communication Technologies, including markets related to China. "
The apparent use of Trump in the technology sector, which remains an essential part of the "Made in China 2025" strategy of Beijing to become a global leader in sectors such as aerospace, clean production and the advanced information technologies, is not just a brewing of the trade war between the world's two largest economies, but also a major political risk in the run-up to the mid-term elections in the fall, given the dominance of the sector in the US stock markets.
In fact, last week, Terry Gou, president of Apple's Foxconn assembler and a key ally of the president recently led the creation of a Foxconn assembly center in Wisconsin that will create up to 13,000 new jobs, said "the biggest challenge we face the US-Chinese trade war (but) what they're fighting is not really a trade war, c & n Is a technological war, a technological war is also a war of manufacture. "
Gou's comments suggest that global supply chain companies are beginning to prepare for disruptions to the ongoing trade war rhetoric between Washington and Beijing, particularly with regard to US accusations of intellectual property theft by Chinese companies . Corp.
President Trump has promised to impose new duties on $ 450 billion of goods manufactured in China that would enter the United States if Beijing responded to an initial list of $ 50 billion in removals on July 6. China said it would retaliate, and promised to use both "qualitative and quantitative" measures.
China imports about US $ 130 billion worth of goods manufactured in the United States each year, which means that any attempt to match Trump's new tariff plan will fail quickly, leaving Beijing with a broader option of changing industrial policy. – in the second largest economy in the world.
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