The Tech Industry’s Global Trade War Conundrum
Big Tech’s Shifting Loyalties
For a while, it looked like President Donald Trump was going to have Big Tech’s back. Now, the tech industry is collateral damage in his global trade war. European Commission President Ursula von der Leyen floated the idea of placing "a levy on the advertising revenues of digital services" if tariff negotiations with the US go south. This would be the opposite outcome that tech CEOs like Mark Zuckerberg were hoping for when they threw their support behind the new administration.
Tariffs and Consequences
To someone like Zuckerberg, Trump was supposed to be the strong-armed leader to bring the overbearing EU to heel. Instead, the rhetoric between the US and EU is ratcheting up just weeks before the EU is already set to fine Meta (and Apple) for violating its Digital Markets Act.
Elon Musk’s Popularity Plummets
While certainly more of a self-inflicted wound, Elon Musk’s popularity in the US has "inverted as his support for President Trump has increased," Nate Silver wrote this week. Tesla’s stock price, meanwhile, has lost over a third of its value this year, and, thanks to tariffs, the company has removed the option to buy new, US-made vehicles in China.
TikTok’s Precarious Situation
As I predicted last week, TikTok is particularly screwed by Trump’s extra-aggressive China tariffs, which the country has promised to "fight to the end." Even as it’s still business as usual for TikTok’s rank and file, the app’s fate in the US feels increasingly precarious. When asked this week about the extended deadline to reach a TikTok deal in the US, a spokesperson for China’s commerce ministry said the government "opposes practices that ignore the laws of the market economy, plunder by force, and damage the legitimate rights and interests of enterprises."
Conclusion
The tech industry has grown so large and influential that its leading companies are tools for leverage between countries. In times of relative peace, that influence can be beneficial for Big Tech. When things get hostile, Big Tech is put in the crosshairs.
FAQs
Q: What is the Digital Markets Act?
A: The Digital Markets Act is a set of regulations aimed at promoting fair competition in the digital marketplace.
Q: What are the consequences of Trump’s trade war on the tech industry?
A: The tech industry is facing a range of consequences, including the potential for tariffs, fines, and damage to their reputation and stock prices.
Q: How has Elon Musk’s popularity been affected by his support for Trump?
A: Elon Musk’s popularity in the US has decreased as his support for President Trump has increased.
Q: What is the situation with TikTok in the US?
A: TikTok’s fate in the US is precarious due to Trump’s extra-aggressive China tariffs, which could lead to the app being banned or heavily restricted.
