The U.S.-China trade war started with the Trump administration accusing China of unfair practices related to the forced transfer of American technology and intellectual property. But U.S. tech companies are seeing little impact so far from the trade dispute as the U.S. on Friday imposed the first round of tariffs on Chinese goods.
The U.S. is imposing an additional duty of 25% on about $34 billion worth of Chinese imports covering 818 products. The list does not include products commonly purchased by U.S. consumers such as mobile phones or televisions. It targets mostly products that are part of the "Made in China 2025" industrial policy. That policy includes industries such as aerospace, robotics, industrial machinery, new materials, and automobiles.
The list of Chinese products impacted includes engines, motors, generators, furnaces, pumps, compressors, machine tools, and manufacturing, construction and agricultural equipment. It also includes aircraft and aircraft parts, cars, trucks, oil and gas drilling gear, television cameras and broadcast gear.
China retaliated on Friday with 25% tariffs on imports of U.S. products, mostly agricultural goods. The impacted U.S. goods include grains, corn, soybeans, meat, fish, dairy, nuts, fruits and vegetables, alcohol and tobacco. China's levies also cover U.S.-made autos.
The U.S. is planning a second wave of tariffs covering 284 Chinese goods worth about $16 billion, but does not have an implementation date yet.
"While tariffs on both sides should have limited direct head wind to IT (information technology) hardware and semiconductor companies, there are a few ways for U.S.-China trade wars to impact companies," RBC Capital Markets analyst Amit Daryanani said in a report Friday.
For instance, companies that procure components and materials from China could see an uptick in their costs, he said.
China Could Retaliate With Regulatory Actions
U.S. technology companies also could be subject to retaliatory actions by the Chinese government, Daryanani said. Memory-chip maker Micron Technology (MU) losing a patent infringement case in a Chinese court this week could be a result of the trade disputes, he said. Micron stock was up fractionally 53.23 at the close.
Also, China has held up chipmaker Qualcomm's (QCOM) acquisition of NXP Semiconductors (NXPI). That deal has been "in limbo 17 months and counting," Daryanani said. Shares of both were up fractionally in afternoon trades Friday.
While the first wave of Chinese products subject to U.S. import tariffs includes computer hard disk drives, U.S. data storage systems vendors Seagate Technology (STX) and Western Digital (WDC) should see minimal impact, he said.
The impact will be "manageable and transitory" given that Seagate and Western Digital also have factories outside of China, he said. Seagate stock was off 2 cents to 58.59 while Western added 0.6% to end the regular trading session at 77.93.
If the trade conflict lingers, though, it could impact the U.S. tech industry in other ways. President Donald Trump has threatened to block Chinese investment in U.S. companies.
That could cut off investment capital being used to fund such things as electric and self-driving vehicles. U.S. firms like Tesla (TSLA) could be impacted. Tesla stock slipped marginally to close at 308.90.
By: Patrick Seitz (Investor's Business Daily).
Photo: CNN.
Review: Emerging Market Formulations & Research Unit, Flagship Records.