| Clay Chandler here filling in for Adam. Tech investors began the week chuffed by the prospect that President Trump and Chinese leader Xi Jinping would revive stalled trade negotiations when they meet this Saturday in Osaka, Japan on the sidelines of the G20 summit. Their optimism was kindled last Tuesday by a Trump tweet revealing the two leaders had spoken by phone and agreed to an “extended” parley in Japan. Over the weekend, numerous media floated the idea that the White House would suspend the next round of tariffs on $300 billion of Chinese imports–the ones that could hit every tech product from iPhones to Fitbits–if discussions resumed. On Monday, U.S. trade representative Robert Lighthizer and Chinese vice premier Liu He agreed on an agenda for the Osaka meeting in a telephone call both sides characterized as productive. Then, yesterday, things fell apart. Reuters, quoting an unnamed senior administration official, reported that “Washington will not accept any conditions around the U.S. use of tariffs in the dispute.” Trump would bring no concessions to Osaka, said the source. Stocks tumbled, marking the biggest drop in a month, led by the tech sector. Hardware makers Cisco Systems, Hewlett Packard Enterprise, and Apple dropped 2% each. Microsoft, Netflix, and Google fell 3%. “Crow will apparently be on the menu at Saturday’s pivotal summit,” intoned Investors Business Daily. “The odds of a feel-good sit-down…just took a major hit.” In fact, those odds were never very high. The trade and tech war has been on a high boil since May 15, when Trump placed Chinese telecommunications equipment giant Huawei Technologies on a national security blacklist barring it from purchasing U.S. components or technologies without government approval. China responded with threats to withhold crucial rare earths from U.S. technology companies, and a vow to devise an “unreliable foreign entities” list of its own. On Friday, the Commerce Department turned up the heat by adding four Chinese companies and a state-owned institute to the U.S. blacklist, citing concerns that supercomputer technologies being developed by those groups might have military applications. The tech tit-for-tat prompted a dire assessment from former U.S. Treasury Secretary Henry Paulson, who warns in Tuesday’s Financial Times that “after 30 years of globalization, we now face the very real prospect that an economic iron curtain may descend” between the world’s two technology superpowers. Paulson fears such a separation might ultimately “undermine America’s own ability to innovate.” MIT president L. Rafael Reif sounded a similar alarm yesterday in an open letter lamenting that rising tensions between the United States and China risked creating “a toxic atmosphere of suspicion and fear” in America’s leading universities and research centers. “Faculty members, post-docs, research staff and students tell me that, in their dealings with government agencies, they now feel unfairly scrutinized, stigmatized and on edge – because of their Chinese ethnicity alone,” Reif wrote. “Nothing could be further from–or more corrosive to–our community's collaborative strength and open-hearted ideals.” Those ideals may be in short supply in Osaka this Saturday. | 
No comments:
Post a Comment