US President Donald Trump seems to have started an open trade and economic war with its EU allies and China. After an exchange of words on increasing tariffs with its G7 partners, the President is now moving ahead with blocking China from acquiring American tech firms.
Therefore, United States might be looking forward to restricting China’s Made In China plans by countering them with its Made In America ambitions.
Blocking China From Acquiring American Tech Firms
According to media reports, US is looking to prevent companies with 25% Chinese ownership to acquire American tech firms, so that Chinese firms are not able to acquire American firms with significant technology.
Trump’s aggressive economic policies that appear to be an attempt at making America Great by downplaying China earlier put military restrictions on contracts with Chinese technology companies. Now, the tariffs put on $34 billion worth of Chinese products that are mainly from tech sector will also be in effect from July 6. The move might put China’s status as manufacturer economy to risk, and might as well jeopardize its status as the next economic superpower.
Impact on Made In China 2025 Goal
China is an emerging economic superpower due to its strong manufacturing base. The country is home to companies that assemble the gadgets and devices. But, it is reportedly looking to manufacture those chips and other parts of the gadgets, something that requires ownership of patents and intellectual property rights. But, a blockade in the way of acquiring the American tech firms that could help China meet its goals is undoubtedly going to put barricades in the way of Made In China 2025 goal.
So, the Trump’s policies are trying its best to stop the flow of intellectual property rights from America to China so that later can’t make meaningful advancements in the fields of artificial intelligence and so.
Effect on Tech Stocks
Trump’s policies to block China from acquiring American tech firms might also impact the stock market. Well, most of the tech giants in Silicon Valley are not Chinese owned, but they are somehow dependent upon Chinese products.
Also, in March, American tech stocks witnessed a significant slowdown. Most of the tech companies performed poorly on the stock exchange due to speculations of President Trump increasing tariff on Chinese tech products. In the same month, Trump’s intervention to prevent Broadcom’s acquisition of Qualcomm made the later to suffer loss.
Once the tariff on Chinese products gets implemented, American tech stocks may once again witness a slump.