The US-China trade war is worrying investors, again.

What are they concerned about? Potential tech war, for one. 

The conflict between these two countries over the technology sector looks to be heating up after the arrest of Huawei Technologies Chief Financial Officer in Canada, while China has retaliated by banning the sale of most iPhone models.

Yet again, the trade war uncertainty drags on the global stock market. The major market indexes have plunged dramatically since last week after the news was released.

For instance, the S&P 500 index dropped by 5.5%, Japan’s Nikkei fell 4.3%, Hong Kong’s Hang Seng and China Shanghai Composite index slipped 4% and 2.4% respectively.

New Round of US-China Tech War Begins

Although US President Donald Trump and China’s President Xi Jinping agreed on December 1 to hold off on increasing tariffs for 90 days, the arrest of Huawei Technologies’ Chief Financial Officer Meng Wanzhou signals to China that the US is not yet ready to pause the conflict.

Last week, Meng was arrested in Canada at the behest of the US government, for alleged violations of US trade sanctions against Iran. The global market is worried about this will be a move that threatens to escalate the trade war between the world’s two largest economies.

Meng is the daughter of Huawei’s founder Ren Zhengfei and a deputy chairwoman at the company and is suspected of involvement in the illegal export of products to Iran.

Huawei founder's daughter arrested on US request, puts US-China trade war truce in doubt.
Huawei founder’s daughter arrested on US request, puts trade war truce in doubt. Image via The Straits Times.

Meanwhile, the arrest has raised concerns that Huawei could be the next target of a US campaign to restrict the rise of Chinese technology companies.

Earlier, US ban this year on exports to telecommunications equipment maker ZTE brought the company to the brink of collapse.

Like Huawei, ZTE has been accused of violating international sanctions against Iran. ZTE reached a settlement with the US in June after paying a fine of $1 billion.

Trade War Counter Attack? China Bans Sale of Most iPhone Models

A Beijing court revealed on Monday that it has banned Apple from selling some of its iPhone models in China for violating two patents of chipmaker Qualcomm Inc.  It’s an unexpected decision that looks to be a ploy to drag the US tech giant into the ongoing trade war.

Although the lawsuit was filed before the current trade war exploded, the decision was handed down after Huawei’s CFO was arrested in Canada, which has led to some experts believing that the court’s decision could be a counterattack to the US.

Chinese court bans some iPhone models over Qualcomm dispute.
Chinese court bans some iPhone models over Qualcomm dispute.

Meanwhile, the timing of the court order came amid the ongoing US-China trade war and rising nationalist sentiment among China’s consumers, with more turning to their own national smartphone brands.

Christopher Balding, a China expert at the Fulbright University Vietnam in Ho Chi Minh City was quoted by CNN Business as saying that the public has to see this as a significant escalation in the trade war.

GoPro Will Move Part of Its Production Out Of China

The trade war between the world’s two biggest economies has made goods from China more expensive after the US imposed 10% tariffs on about $200bn worth of Chinese imports in September this year.

The result is that many foreign manufacturers are moving out their production from China. GoPro, an American technology company, is no exception.

GoPro announced on Monday it will move most of its US-bound camera production out of China by the summer of 2019, becoming one of the first brand-name electronics makers to take such action to minimise the impact of the escalating trade war.

“Today’s geopolitical business environment requires agility,” GoPro Chief Financial Officer Brian McGee said on Monday.

“We’re proactively addressing (all) tariff concerns.”

However, the company is still deciding where to relocate the manufacturing operation.


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