Trade dispute taking a toll on China, US
A Chinese tech giant has been brought to its knees. Tougher inspections at Chinese ports are holding up cars, apples and lumber imported from the U.S. These are among the early signs that the widening trade dispute between China and the U.S. is exacting a toll on both sides.
More talks aimed at resolving the conflict are planned for next week in Washington, while both sides dig in for a fight over their trade imbalance.
The tech giant, telecommunications equipment and smartphone maker ZTE, said Wednesday that it’s ceasing “major operations” after the U.S. last month banned it from doing business with American suppliers for seven years as a punishment for illegal exports.
Also this week, businesses and officials reported that American products are running into delays in customs clearance because of stepped-up inspections at Chinese ports, suggesting Beijing may be making life tougher for U.S. companies as the dispute drags on.
The ZTE business ban stems from a case dating to before the Trump administration, but analysts say the outcome was worse than expected, reflecting a deterioration in trade relations as the two countries vie for technological dominance.
“It has become really political now,” said Nikhil Batra, a telecom analyst at IDC. “There would be wider consequences than for just the telecom industry” and for the companies directly involved, he added.
The U.S. Commerce Department’s ban cut off ZTE’s access to vital technology and components such as semiconductors from U.S. suppliers.
ZTE said in a statement that is has enough cash and will seek to fulfill its contracts. It was unclear if the company is planning to shut down: Last week during trade talks in Beijing, Chinese officials appealed to their U.S. counterparts to end the ban.
But in another sign of fallout, Australian telecom company Telstra said Thursday it will stop selling the company’s mobile phones and broadband devices because of the U.S. ban.
“This was a difficult but necessary step,” Telstra’s head of innovation and strategy, Michele Garra, wrote in a blog post .
ZTE sells smartphones globally and supplies networks or equipment to some of the world’s biggest telecoms companies.
Losing access to U.S. suppliers is a heavy blow for it and the companies it buys from. The company is the No. 4 smartphone vendor in the U.S., where it also sources more than 40 percent of its components, according to IDC data, creating a multibillion-dollar revenue stream for suppliers such as Qualcomm and Intel.