Tech Industry Takes a Big Hit in the US – China Trade War
The trade war raging between the US and China shows no signs of slowing down. In the latest tech news, the controversial Trump administration has announced a new round of tariffs that will be imposed on Chinese goods. The new shakedown is already rattling the tech industry, affecting all businesses from manufacturers of flash memory to semiconductors.
Earlier this week, the United States had declared that it would impose tariffs of 25 percent on imports from China that are worth a whopping $16 billion. In retaliation, the Chinese government announced a similar fate for American goods of the same worth. According to the Office of the United States Trade Representative, these new tariffs have been imposed in response to China’s unfair trade practices. Allegedly, the Asian superpower forcefully transferred American intellectual property and technology.
Tech Industry Leaders Unhappy with New Tariffs
However, tech leaders and trade groups who recently visited President Trump are not pleased with this new development. A statement was also issued by the CEO of the Consumer Technology Association, Gary Shapiro. It brought to light the fact that the new tariff list contains 58 goods that are critical to tech businesses. It also emphasized that this new development could pose a threat to American jobs in SMEs.
The White House certainly doesn’t seem to think so. Last week, officials told representatives from the tech industry that these heavy tariffs would eventually prove beneficial for them in the long run. Just last month, the Trump administration imposed heavy tariffs on Chinese imports worth a staggering $34 billion. This second round of tariffs is set to go into effect from August 23 onwards. It will largely affect the goods used by manufacturing industries, causing unrest among tech giants.
White House Administration Proposes Third Round of Tariffs
Additionally, White House officials are currently working on a proposal for the third round of tariffs. They plan to impose 10 percent tariffs on another $200 billion worth of goods from Beijing. These might affect the consumer goods industry such as products from Apple and Fitbit.
The recent crackdown reflects a sharp reversal in the change of attitude of the US towards China. From virtually zero direct investments in the US by China in 2000, the number reached a record $46 billion in 2016. Earlier, Chinese investors had shown a keen interest in companies working in artificial intelligence, blockchain technology, and robotics. However, Chinese officials eventually made their intentions clear which startled American policymakers. They intended to nurture homegrown companies to become global contenders in the fields of robotics, medical devices, and electric cars.
The USA vs China: When Will the Trade War End?
Before the new tariffs fell into place, US reviews of investments coming in from China were already under scrutiny. The resulting stricter policies were partly due to military reasons. At the beginning of the year, the acquisition of an American money transfer service by a Chinese firm was blocked. This was because of a deep concern regarding Chinese officials having unrestricted access to the financial records of millions of Americans.
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The events of the past year have not culminated in a happy ending for American and Chinese government officials. Relations between them have steadily worsened, with a deep freeze in Chinese direct investments. Last year, it tumbled 36 percent down to $29 billion. This year it hit a record low in seven years, down to a modest $1.8 billion. With tensions escalating between the two superpowers, it may be a while before the trade war gives way to a peaceful negotiation.
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