American Tech Companies Put At Risk In On-going Trade War

As the trade war between US and China grows in severity, one industry is on the edge of being extremely impacted: tech. US tech companies like Google, Facebook, Amazon, and Intel are caught in a trade war in which the US has vowed to employ tariffs on technological goods. This impacts private business greatly as many technological goods are sent to China for assembly. According to CNN, “China accounted around $23 billion” of technological products used and sold in the United States. This poses a problem for numerous companies as they will either be forced to pay more, decreasing profit, or will need to find manufacturers to assemble in countries other than China, disrupting the supply chain.

As of now, items like modems, routers and computer chips will be most affected as these are the bulk of unfinished technological goods that go to China to get assembled. The tariffs employed by President Donald Trump has lacked a clear goal, other than fueling economic animosity. Trump ran a campaign on making America an economically stronger country. He sold himself as the self-made businessman that will help American workers and manufacturers.

However, the ongoing trade war has proved more harmful for American businesses and consumers than its international adversaries.

The stock market saw significant drops in March of 2018, which marked signs for a trade war. In March, S&P dropped by 2.2%, while the overall American stock market saw a drop of 6%, the biggest drop since January 2016. In an attempt to protect American goods and stocks, the Trump administration saw fit to tariff Chinese goods. However, the disastrous impacts of tariffing Chinese goods affected the United States more than it did China.

This escalating trade war has had harsh consequences on American workers, forcing them out of jobs in an effort to save money for the companies that are already facing steep losses due to high tariffs. In turn, consumers are also affected because of a surge in prices on day-to-day goods. This forces the business cycle out of its sinuous regularity which can have damning effects on the American economy, therefore affecting the world.

Yasheng Huang from the MIT Sloan school of Management said that “the relationship between these two countries [India and China] has been at the lowest level since they formed diplomatic relations with each other.” The Trump administration has so far been championing a form of isolationism, alienating far more countries than in the Obama administration. This policy of isolationism has yet manifested into anything helpful for Americans. Some might argue that the economy had grown at a healthy rate under Trump before the trade war, but this is simply the natural economic forces at work. If this trade war continues at the intensity it’s currently running at, it will have far more grave impacts than a slight increase on everyday goods. Companies will have to downscale at an international level, causing numbers of unemployment to rise. Clearly, the assumed value of such a war seems to lose its magnitude when international companies are put at massive risk. This calls into question whether such a war is even one that needs to be fought.

Aditi Mahesh