Trump’s real trade fight with China: tech dominance
Jan 30, 2025
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Bob Davis, a seasoned journalist and POLITICO contributor, dives into the complex landscape of U.S.-China trade relations and the tech industry's role in it. He discusses the potential impact of Trump’s anticipated tariffs on tech companies, highlighting their vulnerabilities to Chinese retaliation. The conversation also explores how technology intertwines with trade policies and the pushback from the tech sector against these tariffs. Davis emphasizes that U.S.-China tech competition will be a defining issue moving forward.
The upcoming trade war under Trump is expected to heavily impact the tech industry, particularly with regard to semiconductor competition and relations with major firms like Huawei and TikTok.
Trump's traditional tariff-focused view on trade may conflict with the urgent need for strategic technological adaptations, influencing the overall dynamics of U.S.-China trade relations.
Deep dives
Anticipated Trade War Dynamics
The potential initiation of a trade war under President Trump involves significant new tariffs on key trading partners, including Canada, Mexico, and China, starting February 1. Trump’s previous trade policies with China, while impactful in shaping public perception, yielded inconclusive results, particularly regarding substantial changes in Chinese business practices. This time, experts anticipate that the focus will heavily revolve around technology, with ongoing tensions likely to center on the semiconductor industry and the treatment of major tech firms like Huawei and TikTok. The trade war may evolve into a more damaging confrontation, according to analysts who stress the importance of technological supremacy in modern trade conflicts.
Tech's Central Role in Trade Policies
Trade wars are increasingly viewed as tech wars, especially in the case of U.S.-China relations, with Trump’s advisors recognizing the significance of American semiconductor exports early on. However, Trump's perception of trade is more traditional, primarily viewing it through tariffs and deals, which sometimes causes friction with his team focused on tech issues. For example, Trump's historical approach to Huawei reflects a broader conflict where negotiations for a trade deal often overshadow the urgent need for strategic shifts in technology-related practices. This fundamental tension may influence how Trump shapes his trade strategy in light of technological advancements and competition.
Potential Reactions and Strategies
The tech industry faces considerable vulnerability to retaliation in the event of a trade war, especially regarding their substantial investments and market operations in China. Past experiences have shown that Chinese responses can include measures such as blocking mergers or imposing fines, which heighten the stakes for U.S. tech firms. As Trump considers leveraging tariff policies, tech leaders like Tim Cook and Elon Musk may advocate for more cooperative relations with China, potentially shaping a more nuanced trade policy. Additionally, the impact of export controls is likely to persist, with little expectation for significant rollbacks, thus influencing the strategic calculations of both U.S. and Chinese stakeholders in the tech arena.
President Donald Trump is expected to begin his global trade war as soon as Saturday, and the tech industry will surely find itself in the crossfire. His promise to slap new tariffs on China, in particular, could leave some tech companies vulnerable to retaliation from Beijing. On POLITICO Tech, longtime journalist and POLITICO contributor Bob Davis joins host Steven Overly to discuss how U.S.-China tech competition will be a defining dynamic in Trump’s coming trade war.