Still not satisfied after slapping tariffs on steel and aluminum imports, trade war enthusiast Donald Trump now has the telecom and technology sectors in his crosshairs, according to press reports.
The US president plans to impose tariffs on up to $60 billion worth of Chinese imports, according to an update from Reuters, and will focus largely on telecom and technology equipment.
Citing sources close to the Trump administration, Reuters says that tariffs will target IT, consumer electronics and telecom and could be introduced "in the very near future."
Trump has previously argued that trade wars are a positive thing and that restrictions will protect US jobs against competition from low-cost Asian markets. His administration has also claimed that Chinese companies such as Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), which sell network equipment and devices, are a potential threat to US national security.
US officials say China's government could use equipment and services from the Chinese companies to spy on the US.
US carriers that deal with the government have been warned off buying gear from Huawei and ZTE since 2012, when a government report first labeled them a security risk. Earlier this year, Texas Congressman and Trump supporter Mike Conaway proposed new legislation that would stop companies from buying any product or service from the Chinese companies. (See Huawei, ZTE Face US Federal Ban.)
The move came just after Huawei had failed to land a major smartphone distribution deal with AT&T Inc. (NYSE: T), one of the US market's biggest mobile operators. At the time, Reuters reported that security concerns were raised during the discussions between AT&T and Huawei.
Earlier this week, Trump moved to block the proposed takeover of US mobile chips maker Qualcomm Inc. (Nasdaq: QCOM) by Singapore-headquartered Broadcom Corp. (Nasdaq: BRCM). The US government is rumored to have been concerned about Chinese influence over Broadcom. (See Trump Blocks Broadcom's Qualcomm Acquisition .)
The backdrop to these disputes and the possibility of further tariffs is US concern that China could emerge as the dominant force in areas including 5G, a next-generation mobile technology, and artificial intelligence.
Huawei, China's biggest network equipment maker, last year spent about $12 billion on research and development, nearly three times as much as Sweden's Ericsson AB (Nasdaq: ERIC), one of its biggest Western rivals.
Chinese Internet companies such as Alibaba, Tencent and Baidu, meanwhile, have emerged as a serious challenge to Silicon Valley in the development of AI. In January, Alibaba's latest AI was reported to have outperformed humans in tests of reading ability and comprehension.
Bjorn Taale Sandberg, the head of research for Norwegian telecom operator Telenor, thinks AI will underpin every industry and service in the next 20 years. If his prediction proves correct, the companies and countries that control the leading AI systems will be in a dominant position.
Any tariffs that specifically target China would be sure to meet with a response from Beijing, however. According to Reuters, Chinese foreign ministry spokesperson Lu Kang has already indicated that China could retaliate if hit with punitive measures.
"If the United States takes actions that harm China's interests, China will have to take measures to firmly protect our legitimate rights," he is quoted as saying.
— Iain Morris, News Editor, Light Reading