Google and Facebook could be caught in the US-China trade war

President Donald Trump’s trade wars have reached Silicon Valley.

The Trump administration is considering tariffs on networking equipment from China. That could spell trouble for companies that buy Chinese components for their global cloud computing operations, such as Google (GOOGL), Facebook (FB) and Amazon (AMZN), analysts say.

And chip makers such as Intel (INTC) could face tariffs on computer chips. US companies often send mostly finished chips to China for assembly, testing and packaging. Those companies could pay a penalty when those chips are shipped back into the country.

So far, US tech giants have largely stayed out of the trade fight. The threat of tariffs on tech products from China could force Silicon Valley leaders to be more vocal about their concerns.

“[As you see] what types of products they’re hitting, I think it becomes a lot more tangible, and a lot more real” for tech companies, said Daniel Ives, chief strategy officer and head of technology research at GBH Insights.

Modems and routers are on a list of Chinese goods worth $200 billion that could face 10% tariffs in the United States after August 30. A tariff on those products could also hurt the tech industry, which uses huge IT networks to deliver products and services around the globe.

China accounted for almost half of the roughly $23 billion of IT network gear the United States imported in the 12 months through April, according to Panjiva, a global trade research companyowned by S&P Global Market Intelligence.

Companies will either need to find alternative suppliers from outside China, or cope with higher prices, said Chris Rogers, a Panjiva research analyst. Some suppliers could end up relocating from China to Vietnam or Malaysia, he added.

Amazon, Facebook and Google can probably absorb small, temporary increases in cost, according to Ives. The bigger concern is that tariffs will disrupt their supply chains, causing delays and slowing product rollouts, he said.

Get Free Email Updates!

Signup now and receive an email once I publish new content.

I agree to have my personal information transfered to MailChimp ( more information )

I will never give away, trade or sell your email address. You can unsubscribe at any time.

Be the first to comment

Leave a Reply

Your email address will not be published.


*