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China Could Target US Tech Firms, Analyst Warns

US tech companies may be in the direct firing line of the escalating trade war with China, according to Goldman Sachs equity strategist Peter Oppenheimer.

Oppenheimer told CNBC yesterday that China’s next step in the escalating conflict could be to impose tariffs on components essential for supply chains.

“The target may be technology companies that have been the main driver of the equity bull market that we have seen in the US and beyond,” Oppenheimer said.

Such measures could affect the production for tech giants such as Apple and Amazon and for much smaller tech businesses alike.

China has already announced a range of retaliatory measures after the US Government announced on Monday that it was placing a 10 per cent tariff on a further $US200 billion worth of Chinese imports, which would rise to 25 per cent by the end of the year.

This follows an earlier announcement of levies on $US50 billion, which the Chinese Government responded to by slapping a similar amount on US imports into China.

The Chinese Government has repeatedly said that it has “no choice but to react”, and one of the measures Oppenheimer alluded to was China raising the cost of goods it manufactures for US retail outlets, causing a rise in US inflation.

“They may raise their prices by a small amount to begin with, but rising inflation at a time when you have had the economy growing for nine years, with extremely strong momentum at the moment, could feed interest rate expectations,” he added.

Meanwhile, another analyst told CNBC that China’s economy was much vulnerable than the US was from the escalating trade war.

“If you put tariffs across the board on both countries…it’s a four times bigger hit to China because they export four times as much as they import,” said Ethan Harris, head of global economics at Bank of America Merrill Lynch.

Even so, he said that China’s leaders were not going to be so easily intimated, especially with the US mid-term elections approaching and the potential disaster that awaits US President Donald Trump, who Harris said was equally as unlikely to back down.

 

 

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