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Your guide to what the 2024 US election means for Washington and the world
The Tech Industry’s Risky Bet on Trump
For a week, Silicon Valley’s bet on Donald Trump looked to be turning very bad, very quickly. The hit to complex electronics supply chains made Apple, Nvidia, and Tesla among the biggest casualties of the US president’s assault on the global trading system. And with potentially ruinous tariffs looming on computer systems embedded with GPUs — the chips fueling the artificial intelligence boom — it was possible to imagine the training of the most advanced AI models being driven outside the US.
The Unresolved Issues Behind the Trade Upheaval
The temporary stay of execution produced a monumental relief rally that added $1tn to the value of Apple, Nvidia, and Tesla. But renewed pressure on tech stocks on Thursday was a reminder that the issues behind the trade upheaval are entirely unresolved.
A Clash of Interests
The US tech industry grew up in the age of globalization and was thoroughly shaped by it. It always looked like a risk for some of its most prominent leaders to throw their lot in with MAGA, whose nativist and isolationist instincts clash directly with many of tech’s interests.
The End of an Era
This goes well beyond the electronics supply chains that are most directly at risk from a trade war. Open access to digital markets around the world, along with free international flows of data, have contributed to American dominance of the consumer internet and cloud computing. The US trade surplus in information and communication technology services, for instance, stood at $30bn in 2023, while its surplus in all digitally deliverable services produced a net $267bn benefit.
The Coming Era of Trade Tensions
And that does not take account of the huge profits that US tech groups make from overseas sales that are not captured in the official trade data, such as Apple’s margins on the iPhones it sells in China, or Google’s advertising revenue from internet searches in Europe. The trade crisis made these an obvious target for retaliation — a risk that will inevitably return with any future trade tensions.
Conclusion
The techies are betting they can steer Trump for their benefit, and will feel some vindication from his climbdown on tariffs. But hitting the 90-day pause button will not solve the underlying issues that brought the crisis about, or prevent long-term damage from what has transpired.
Frequently Asked Questions
Q: What is the current state of the US tech industry?
A: The US tech industry is facing significant challenges due to the ongoing trade tensions and the uncertainty surrounding the global trading system.
Q: How will a Democratic administration affect the tech industry?
A: A Democratic administration might have tied them up in regulation, making it hard to outpace China.
Q: What is the impact of Trump’s policies on the tech industry?
A: Trump’s policies, such as the tariffs, have already caused significant damage to the tech industry, and the industry is concerned about the long-term effects of his actions.
Q: What is the future of the global trading system?
A: The global trading system is likely to become more fragmented and confrontational, with countries seeking to reduce their dependence on US technology and increase their own competitiveness.
