According to Bloomberg sources, the Chinese government is planning to increase its scrutiny of U.S. companies operating in China if U.S. President-elect Donald Trump implements measures against Chinese goods, triggering a trade war. Beijing is reportedly already crafting retaliatory measures against the United States, such as probes against U.S. companies, anti-dumping measures and a reduction in government purchases of U.S. goods. But Beijing would like to avoid taking these steps if it can, and it will reportedly crack down on U.S. firms only in the event that it is targeted first.
Should China make good on its threat, it would be most detrimental to the U.S. economy, though it would also certainly hurt China as well. The U.S. technology sector would be especially vulnerable to the fallout of a U.S.-China trade war. Apple, for example, earned some $48.5 billion in 2016 — 22.5 percent of its total revenue — from sales to China alone. Intel also relies on China for about 21 percent of its revenue. Because Trump has surrounded himself with trade advisers who are focused on heavy industry, the probability of a trade war has risen.
To complicate matters, Chinese companies are trying to break into the U.S. smartphone market. On Jan. 6, Huawei Technologies Co. Ltd. launched its Mate 9 smartphone. Priced at $599, the phone was designed to compete with the Samsung Galaxy S and the Apple iPhone series, and the company has no plans to build any of its phones in the United States. If Trump cracks down on Huawei and other Chinese tech companies, it will undoubtedly alarm Beijing. And at this point, it is unclear how much pressure Beijing is willing to endure before it retaliates.