President Trump announced on Friday that he would rescind a Commerce Department ban on U.S. business with China’s ZTE, an action that lawmakers had previously warned against. The action appeared to signal a further slackening of tensions between the United States and China over trade.
However, Tuesday morning, the White House announced $50 billion of tariffs on goods imported from China “to protect domestic technology and intellectual property from certain discriminatory and burdensome trade practices by China.”
Meanwhile, Reuters reported that Qualcomm expects to meet with Chinese regulators this week and believes it may receive final approval from that government to consummate its purchase of NXP. And Bloomberg reported that China will approve Qualcomm's deal for NXP if Trump successfully lifts the restrictions on ZTE.
And, casting a pall over the entire situation, the New York Times reported that Ivanka Trump, President Trump’s daughter, received seven new trademarks from the Chinese government for her various businesses. The publication noted the timing of the awards wasn’t out of the ordinary, but nonetheless raised concerns over the separation of Trump’s family business connections with his role as U.S. president.
Taken together, the movements indicate that U.S.-China relations over trade remain tenuous, and hanging in the balance are a number of major tech players in the global wireless industry.
Kicking off the latest round of actions was President Trump, who tweeted at the end of last week a plan to allow ZTE to restart its business:
Senator Schumer and Obama Administration let phone company ZTE flourish with no security checks. I closed it down then let it reopen with high level security guarantees, change of management and board, must purchase U.S. parts and pay a $1.3 Billion fine. Dems do nothing....— Donald J. Trump (@realDonaldTrump) May 25, 2018
But this morning the White House announced that “the United States will impose a 25 percent tariff on $50 billion of goods imported from China containing industrially significant technology, including those related to the ‘Made in China 2025’ program. The final list of covered imports will be announced by June 15, 2018, and tariffs will be imposed on those imports shortly thereafter.”
It's unclear whether Qualcomm’s attempts to purchase NXP will be affected by today’s latest developments. Reuters reported Sunday that, according to unnamed sources, the company is making a final push with Chinese regulators to close its purchase of the chipmakers. The Chinese government is the last regulatory agency that Qualcomm needs to sign off on its purchase of NXP, a deal that the company is hoping will give it the ability to expand its business far beyond the slowing smartphone market.
How U.S.-China trade relations play out could have a serious effect on the U.S. wireless market. After all, companies like Apple and Qualcomm collect significant revenues from the Chinese market. Furthermore, lawmakers and regulators have clearly stated a desire to ensure that the United States retains a clear leading role in the development of 5G wireless technology.