The matter of the trading loggerheads between the US and China is a long and complicated story. From a disagreement over trade tariffs and American concerns that Chinese goods are dominating the market, it escalated into a US lockout of Huawei products and services under the suspicion that its tech facilitates global spying for the Communist government. From here, US companies have been tied up to prevent transactions with Huawei and Chinese tech firms. More recently, the tensions are being spurred to make American manufacturers move their hardware production capacity out of China. Four major tech brands are doing so.
The Verge has it that HP, Dell, Microsoft, and Amazon are all considering a pullout of all their Chinese-based production of their hardware, from components to whole devices. The laptop makers Dell and HP are mulling over transferring production of some 30% of their finished computers. Microsoft will also shift the number of Xbox Ones being made in China just as Amazon will be doing with their Kindle e-readers and Echo smart speakers. This is in worried anticipation for the massive tariff the US will be putting on goods coming from China, even if they are made for American companies.
US manufacturers along with others from around the world have long relied on China for their actual hardware production. At first it was because of the drastically lower costs compared to making stuff in their home countries. It also helped that China’s massive territory provides almost all necessary resources for supplying tech manufacture. Finally, the opening of China to the world market has led to some neck-breaking speed in technological development that the Asian power could offer devices that are nearly equal in abilities to American products at lower prices. This of course dovetails to the current US-China trade standoff that sees the two making business harder for each other.
President Donald Trump has spearheaded a measure that would slap a 25% tariff on $200 billion worth of China-made goods. It has been a lingering fear for US companies making their tech products in the People’s Republic that the tariffs will inevitably apply to common devices like smartphones, laptops and game consoles, which has been the impetus for Amazon, Dell, HP and Microsoft to begin moving their production away from the trade war battlefield. Already doing so much earlier than these for are the likes of Apple, Nintendo and Google.
Image courtesy of Reuters