Technology industry investors have reacted with concern to an announcement by US President Donald Trump that tariffs on imports from China could more than double from 10 percent to 25 percent as part of an ongoing trade war between the two nations.
US President Donald Trump launched a trade war with China in March 2018 by signing an executive memorandum enacting tariffs on around $60 billion of Chinese imports. Despite concerns as to how they could impact the US technology industry, the tariffs were expanded in September 2018 to cover $200 billion in imports. While some technology companies downplayed the potential impact, while admitting that production was beginning to shift in order to minimise any issues it may cause, the tariffs were named as a key cause in the closure of CaseLabs.
Now, in keeping with a pledge made in September last year, President Trump has stated his intention to raise the tariff on the $200 billion of marked imports from 10 percent to 25 percent and raise another 25 percent tariff against an additional $325 billion in goods. The Chinese government's response came in the form of threats to cancel trade talks between the two countries, while the technology industry itself may prove a target for retaliatory tariffs in the opposite direction.
Investors in the industry have not taken the news well: AMD, Intel, and Nvidia all saw their share prices drop following President Trump's announcement, and while they have begun to recover have yet to regain the pre-announcement high.
The new tariffs from the US are due to come into force this Friday, and as with previous tariffs cover a range of materials and products relevant to the US semiconductor industry - in particular completed and semi-completed processors, many of which are manufactured, assembled, or tested in China and which would be subject to both the US tariffs as they leave the country and any retaliatory tariffs imposed by China as they enter.
February 17 2020 | 09:00