Anti-Trump Drumbeat and Escalating Trade War

Tariffs on Imports from China Not Mere Populist Politics

The continuing trade tensions among the U.S., China and Europe have put the spotlight on some truths that liberals tend to brush under the rug. According to a Bloomberg report today, the U.S. was set to raise tariffs on Chinese goods worth $200 billion to 25% from 10%.

It is not without reason that U.S. President Donald Trump is threatening tariffs on all imports from China. I don’t want to talk about any possible capitulation by Mr Trump.

It is naive to deliberately gloss over the reality that China’s imports are four times lower than its exports, leading to a wide trade imbalance.

Anti-Trump Drumbeat

No obtuse anti-Trump drumbeat is sustainable in the light of lingering suspicions, with substance, that China could imperil national security if its tech companies such as ZTE and Huawei are given a free rein. Huawei is incidentally the world’s second largest smartphone maker after Samsung, leaving Apple in third place.

Smartphones from China are the ones leading to security concerns voiced by the U.S., Australia, Canada and the U.K. Consumers appear to be least perturbed by it as just last quarter Huawei sold more than 54 million smartphones.

State Links of ZTE, Huawei

ZTE is a state-owned company having been founded by China’s Ministry of Aerospace. Huawei is a private firm founded by a China Army officer.

China had a few years ago ordered its tech firms to hand over encryption keys and install backdoors ostensibly for anti-terrorism activities. Any fears of cyber espionage cannot, therefore, be unfounded.

Trade War

MNCs Get Only 50% of Revenues from Outside the U.S.

During the last 20 years I have been with Information Technology multinationals, driving and winning even billion-dollar bids, the pace of change has been the defining constant.

Where I saw no change is in the clichéd refrain that “around 50% of the company’s annual revenues come from outside the U.S.” Name any American technology firm, the message will largely be the same.

This despite all hype that emerging markets in China, India and Latin America offered succour to firms grappling with cyclical economic slowdowns in the U.S. and Europe. It is only tobacco companies that garner greater revenues from outside the U.S.

I am not implying any numerical manipulation. Yet, one country (the U.S.) giving its companies 50% of their revenues and the rest of the world accounting for the other 50 only shows how lopsided business has been for the cradle of innovation.

There is no denying that two decades ago revenues will have been marginally higher – possibly 60% from within the U.S. The ugly side of globalisation is often ignored – stolen technology patents.

Theft killed the off-the-shelf software market with innovations taking the mode of delivery to the cloud, which is offering a safe abode for the rest of the technology world, too.

G Joslin Vethakumar

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One response to “Anti-Trump Drumbeat and Escalating Trade War

  1. Pingback: SingHealth Breach: How Vulnerable is NGNBN, Powered by Huawei? | Top of the Word

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