POLITICO Tech: Trump’s Latest Tech War with China Begins
Release Date: February 6, 2025

In the latest episode of POLITICO Tech, host Stephen Overle delves into President Donald Trump's renewed trade tensions with China, examining the broader implications for the global tech industry and online retail sectors. Joined by Chad Bowen, a senior fellow at the Peterson Institute for International Economics and former chief economist at the Biden State Department, the discussion unpacks the evolving landscape of US-China trade relations and its ripple effects across various industries.

Introduction to the Latest US Tariffs

The episode opens with an overview of President Trump's recent imposition of tariffs, not only on China but also extending to Mexico and Canada. These moves signify a broader strategy to exert economic pressure on multiple fronts.

Stephen Overle (00:28):
"President Donald Trump's latest tariffs on China are still in place. But all week trade news has been changing fast. Trump rattled markets earlier this week by slapping tariffs on Mexico, Canada, and China."

Chad Bowen explains that while tariffs on Mexico and Canada were temporarily postponed after agreements on border security and fentanyl trafficking, the 10% tariffs on Chinese imports remain firmly in place.

Chad Bowen (02:23):
"We're still left with some tariffs that actually went into effect as of, you know, midnight 01 on Tuesday morning. And they're now 10% and it's on everything that we import from China."

Impact on US-China Trade Relations

Bowen highlights the significance of the 10% tariff rate, noting that although it's lower than the initial 25%, it now applies to a broader range of Chinese imports, including consumer electronics.

Chad Bowen (03:15):
"These are quote, unquote, only 10%. So it's a slightly lower rate, but now it's hitting everything that we import from China. And a lot of what we have been buying from China has shifted over that time period."

This shift means that products previously exempt or under lower tariffs are now subject to higher costs, impacting various sectors and consumers.

Specific Effects on the Tech Industry

One of the most significant shifts discussed is the direct impact on the tech industry. Unlike during Trump's first term, when many tech products were spared from heavy tariffs, the current measures encompass a wide array of tech goods.

Stephen Overle (04:06):
"The first time around, tech in some ways got kind of lucky. A lot of tech companies, tech products escaped the tariffs that Trump put on China in his first term. That's not the case now."

This broadening of tariffs threatens to increase costs for tech companies and potentially slow the flow of technology innovation between the US and China.

China's Retaliation

In response to the US tariffs, China has not limited its retaliation to traditional sectors like coal and gas. Notably, China has launched an anti-monopoly investigation into Google, signaling a strategic move to target major US tech firms.

Stephen Overle (04:38):
"Beijing has put tariffs on American coal and gas and farm equipment and some other products. But being a tech podcast, it was especially notable to me that they've announced an anti monopolistic investigation into Google."

Chad Bowen anticipates that this pattern is likely to continue, potentially escalating the trade conflict further.

Chad Bowen (04:38):
"I do think it probably is. This time around, yeah, it looks like it's not only tariffs hitting tech products for the first time, but we have seen the tech industry over the last couple of years be caught up more in the US China tensions."

Changes to De Minimis Exemption

A significant policy shift discussed is the removal of the de minimis exemption for China, which previously allowed packages valued under $800 to enter the US without incurring tariffs. This change targets e-commerce giants like Temu, Shein, and Wish, whose business models rely heavily on this exemption.

Stephen Overle (06:36):
"One change that Trump has made as well is closing what's known as the de minimis exemption for China. And it used to be that packages worth less than $800 didn't have to pay customs duties or tariffs. That's no longer the case."

Bowen explains the potential consequences, including higher prices for consumers and disruptions in the availability of affordable goods.

Chad Bowen (06:36):
"Now it's really going to have a, you know, we'll see what the response is. It could affect not only the Temu and Shein business model... but also American consumers."

Winners and Losers of the New Tariff Policies

The episode explores the dichotomy of the new tariff policies, identifying both beneficiaries and those adversely affected. While American consumers may face higher prices and reduced access to affordable goods, domestic e-commerce giants like Amazon and Walmart could gain a competitive edge by facing less competition from Chinese imports.

Stephen Overle (10:13):
"American businesses generally have been opposed to Trump's tariffs... closing the de minimis exemption seems like the kind of thing that some companies might celebrate."

Chad Bowen (10:38):
"There will be American companies that now face less competition from... Shein and Temu's of the world that are probably gonna benefit from this."

Comparison to the First Trump Administration Trade War

Bowen contrasts the current trade measures with those from Trump's first term, noting that the initial trade war was a slower-moving conflict primarily focused on specific sectors. In comparison, the latest measures are more comprehensive and rapidly implemented, directly affecting critical areas like technology.

Chad Bowen (11:41):
"The first trade war back in the first Trump administration was really a very slow moving beast... Now, obviously part of the tech industry is certainly having influence elsewhere within the Trump administration, but... a lot of their products are likely to get caught up in these tariffs."

Future Implications and Global Tech Standards

Looking ahead, Bowen emphasizes the importance of global standards and the role of international cooperation in maintaining the competitiveness of the American tech industry. He warns that without unified global standards, US tech firms may face increasing regulatory pressures and retaliations from other countries, including potential actions from the European Union.

Chad Bowen (14:39):
"They may find themselves now being caught up in what other countries are doing when it comes to retaliation... Might they choose to try to regulate those tech companies differently?"

Bowen underscores the necessity for the US to engage proactively with global standard-setting bodies to sustain its technological edge.

Insights from Chad Bowen

Throughout the episode, Chad Bowen provides a nuanced analysis of the trade dynamics, highlighting the interconnectedness of technology, economics, and geopolitics. His expertise offers listeners a comprehensive understanding of how the latest tariff actions could reshape the global tech landscape.

Chad Bowen (13:30):
"Tech is everywhere, in a sense. There was... worrying about the supply chains and the inputs, again, those critical minerals and raw materials that you need to make all of those really cool tech products too."

Conclusion

In this insightful episode, POLITICO Tech sheds light on the complexities of the latest US-China trade tensions, particularly their impact on the technology sector. With tariffs now encompassing a broader range of imports and significant policy changes like the removal of the de minimis exemption, the episode underscores the potential for substantial shifts in the global tech economy. Chad Bowen's expert commentary provides valuable perspectives on the immediate and long-term consequences of these developments, making it a must-listen for stakeholders in technology and international trade.

Notable Quotes:

• Chad Bowen (02:23):
  "We're still left with some tariffs that actually went into effect as of... they're now 10% and it's on everything that we import from China."

• Stephen Overle (04:06):
  "The first time around, tech in some ways got kind of lucky. A lot of tech companies, tech products escaped the tariffs that Trump put on China in his first term. That's not the case now."

• Chad Bowen (06:36):
  "Some of these products... now all of a sudden are going to have to pay those tariffs, other kinds of administrative fees and things of that nature too."

• Chad Bowen (10:38):
  "There will be American companies that now face less competition from... Shein and Temu's of the world that are probably gonna benefit from this."

• Chad Bowen (14:39):
  "They may find themselves now being caught up in what other countries are doing when it comes to retaliation... Might they choose to try to regulate those tech companies differently?"

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