How US-China Export Control Fights Will Impact Global Businesses
US-China fights on export controls, including on technology, will continue impacting US and Chinese firms — but also their business in key third markets.
As the United States and China continue their unending tit-for-tat on export controls, including on technology, the volatility will continue impacting US and Chinese firms — with similarities in some impact areas and serious differences in others. Both US and Chinese businesses are likely to face near- and long-term issues in key third markets should the tremendous uncertainty persist. Brought to you by Global Cyber Strategies, a Washington, DC-based research and advisory firm.
The One-Liner
US companies are likely to keep clashing with the Trump administration on China, tech, and national security — and while Beijing, for its part, can step back and let Washington take the international blame for the volatility, it must balance those rhetorical gains with the real damage Trump inflicts upon its tech giants.
The Column
This is an excerpt of the latest Barron’s column from our founder and CEO, Justin Sherman.
Export controls have become one of the most important battlegrounds in the U.S.-China trade war. U.S. negotiators in London are hoping to extract a handshake from Chinese officials to roll back restrictions on rare earth minerals that have alarmed U.S. companies. But that is only the latest move in a tech tit-for-tat that has high stakes for global companies.
In recent weeks, the Trump administration has halted many exports of jet engine technology, semiconductors, and chemicals and machinery to China. In response, China cracked down on its export controls on critical minerals—those used in consumer electronics, high-tech defense systems, and more.
These measures and the constant back-and-forth between D.C. and Beijing create tremendous near- and long-term uncertainty for both U.S. and Chinese companies. U.S. companies are likely to keep clashing with the Trump administration on China, tech, and national security. And while Beijing, for its part, can step back and let Washington take the international blame for the volatility, it must balance those rhetorical gains with the real damage Trump inflicts upon its tech giants.
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Export-control changes will undercut both U.S. and Chinese firms’ ability to plan out their supply chains and component sourcing. Companies in both Seattle and Shenzhen will face day-to-day uncertainty about whether they can get the minerals and components they need for phones, laptops, robotics systems, and more.
Uncertainty around U.S. and China export controls will also impact third countries, such as India and Brazil. Prospective customers in those countries will increasingly question if they can rely on a U.S. or Chinese AI data center provider or depend on a U.S. or Chinese vendor to deliver on its microelectronic promises. Demand uncertainty for U.S. and Chinese sellers will, in turn, go up.
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Beijing may very well see plenty of geopolitical benefits from this mayhem. It can sit back and let the U.S. behave in ways that many countries view as erratic, let other countries and their industries get hurt by American trade and export security policies, and continue to position itself in third countries as a more reliable provider of critical and emerging technologies and their underlying components—from batteries to chips to minerals. Indeed, Chinese propagandists are already capitalizing on the current environment: Authorities have accused Trump of abusing export controls. The state-run China Daily recently dubbed U.S. tariff and export-control switch-ups part of a “devious blame game” Washington is playing with China.
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Read the full Barron’s column here.
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