Money & Business

Tech Groups Warn of China Blowback on Tariff, Security Issues

By / May 7, 2018 A smartphone by Huawei, a Chinese company whose business has come under U.S. scrutiny in recent weeks. (Kārlis Dambrāns/Flickr)

With Chinese tech companies in U.S. government crosshairs and tariffs at the center of the conversation, associations in the tech world and beyond are warning of lasting ripple effects if and when China responds.

The tech world has deep ties to China. And with the moves by the Trump administration to put tariffs on Chinese imports or target Chinese companies, tech groups are expressing concern about the potential blowback.

Beyond the already announced steel tariffs, the Pentagon has prevented some Chinese technology manufacturers, including Huawei and ZTE, from selling their products on U.S. military bases. It’s just the latest knock on the companies, whose products have been implied to be security threats and whose purported ties to the Chinese government have led to additional scrutiny, including a recent ban on working with American suppliers and a call by U.S. intelligence officials for Americans not to buy their products. The concerns have ramped up nearly simultaneously with the toughening stance on Chinese trade.

Last week, in response to the growing controversy, the Information Technology Industry Council (ITI) and the Information Technology and Innovation Foundation each expressed concern to The Hill that the actions against the companies could lead to retaliation against U.S. companies that rely on Chinese-built technology.

“Tariffs and any Chinese retaliation that could follow would hurt American consumers, businesses and workers, and not level the playing field with China,” stated ITI spokeswoman Ashley Berrang.

The comments come at a time when a new study backed by the Consumer Technology Association (CTA) and National Retail Federation effectively makes the same point. Tariffs on Imports from China: The Estimated Impacts on the U.S. Economy [PDF], a report released by Trade Partnership Worldwide, LLC, late last month, suggested that a rise in tariffs could lead to a significant decrease in U.S. output in a variety of sectors, including farming and construction. And while some spaces, like electronics manufacturing, would see job growth, the growth would be offset by a significant loss of jobs in other sectors.

The report says that a trade war with China would cause around 134,000 workers to lose their jobs as well as $3 billion decline in economic output in the U.S. The conflictwould impact every state, particularly those in the Rust Belt.

In comments to Bloomberg, CTA President and CEO Gary Shapiro stated that the report showed that more aggressive tariffs against China wouldn’t help Americans.

“Rising costs on farmers, manufacturers and service providers isn’t the answer,” Shapiro said. “It shows protectionism will weaken America.”

The recent efforts on the tariff front reflect a growing level of collaboration between trade groups in opposition to the Trump administration’s actions on the issue.

Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. More »

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