But in the short term, at least, many American companies may feel the pain.
The deal stalled. The company says the price of key items it needs to make its products could go up. Multinationals worry about their ability to do business in China in the future – it’s a huge market.
The trump administration said Friday it would impose a 25 percent tariff on China’s $50 billion exports. China retaliated almost immediately, saying the us had “initiated a trade war”.
The us government says it will punish Mr Trump for intellectual property theft in two waves. Tariffs on more than 800 exports, worth about $34 billion, will begin on July 6th. Another 280 exports are still subject to public comment and will take effect later.
The announcements immediately sent companies and industrial groups scrambling to find out whether goods in the supply chain would be targeted and how higher tariffs would affect their bottom line. A wide range of companies, from chip makers to aerospace giants such as Boeing, could be affected.
Representative including Intel (INTC) and qualcomm (end), the major chip manufacturers in the semiconductor industry association, said very pleased to find that the U.S. government is considering tariffs on imports from China of computer chips.
American companies routinely send most of their finished chips to China for assembly, testing and packaging. When the chips are shipped back to the country, they could face tariffs.
“Although the U.S. semiconductor industry and the government of China compulsory trump the concerns of the technology transfer and intellectual property practice, Suggestions on Chinese semiconductor tariffs, however, most of which is, in fact, in the United States to study, design and manufacturing, the opposite,” the group said in a statement.
Qualcomm, based in San Diego, also needs Chinese approval for a $44bn takeover of Dutch company nzep semiconductor.
The deal was first announced in October 2016 and has been on hold for months in trade talks between the United States and China. Qualcomm has already given the green light to regulators in eight other jurisdictions, including the European Union and South Korea, and is waiting for Beijing.
The deal is likely to stay with regulators for a long time, according to Paul Triolo, who focuses on Eurasia group’s global technology policy.
The approval of the merger is linked to a us rescue of ZTCOF, the Chinese telephone and telecoms equipment maker, which was paralyzed by a us export ban earlier this spring. Earlier this month, the government and the trump zte reached an agreement, but to save the company agreement rejected by the congress, they think that it should continue to exist, because the zte pose a security threat.
“The two sides still hope deleted from the already complex equation zte and qualcomm [trading], but the two sides in the political pressure and the relationship of the serious upgrade screw the two deals are likely to get in trouble,” Triolo said.
Other multinationals with many operations in China could also be at a crossroads in trade battles.
Boeing shares closed down 1 per cent on Friday, while caterpillar closed down 2 per cent.
Boeing is the largest single exporter to the United States and China is a key market for the company. In September, it said it expected China to spend nearly $1.1 trillion over the next 20 years on more than 7,200 new aircraft.
If the us exits trade, China has threatened to buy airbus aircraft rather than Boeing aircraft. Boeing did not respond to requests for comment.
So far, companies with operations in China have largely kept a low profile, hoping for a deal between the United States and China, said Samm Sacks, senior research fellow at the center for strategic and international studies’ technology policy program.
Now the storm hit, the enterprise should be especially careful, especially in abide by Chinese laws and regulations, she said, adding that he fears that Beijing may punish the wrong company, to send a message to Washington.
Things could get worse before the business community gets better.
The White House said it would announce restrictions on Chinese investment in the United States by June 30. So far, the details have been sparse – but corporate America will be shaken by changes in the us investment system, cutting off foreign investment.