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Your Guide to Washington and the World’s 2024 US Election Means
For a week, Silicon Valley bets on Donald Trump seemed to get worse very quickly. The hits on the complex electronics supply chain have made Apple, Nvidia and Tesla one of the biggest casualties of the US president’s attack on the global trading system. Also, with the imminently catastrophic tariffs looming on computer systems with embedded chips fueling the artificial intelligence boom, we were able to imagine training for the most advanced AI models driven outside the US.
The temporary stay of the enforcement created a monumental relief rally, adding $1tn to the value of Apple, Nvidia and Tesla. But new pressure on tech stocks on Thursday reminded us that the problems behind the dramatic trade upheaval have not been resolved at all.
The US high-tech industry grew up in an age of globalization and was fully shaped by it. It seemed like a risk that some of the most prominent leaders would throw lots along with the Magazine.
This goes far beyond the electronics supply chain, the most direct from the trade war. Open access to digital markets around the world, along with free international data, contributes to the American domination of consumer internet and cloud computing. For example, the US trade surplus in information and communications technology services was $300 billion in 2023, while the surplus in all digitally delivered services generated $267 billion in profits.
And it doesn’t take into account the enormous profits sold by US tech groups from overseas sales that are not listed in official trade data, such as Apple’s margins sold in China and Google’s advertising revenues from internet searches in Europe. The trade crisis has made these clear targets of retaliation. This is the risk of future trade tensions and inevitably returning.
Some of the other tech interests are in stark contrast to the movement that put Trump in the White House. Silicon Valley has long benefited from being able to tap many of the world’s brightest computer scientists. The immigration between Elon Musk and Magazine champion Steve Bannon at the beginning of this year reminded me that this issue is far from being resolved.
Silicon Valley is also risking a hit with a very important soft power due to its close alignment with Trump’s most divisive policies. The damage caused by Tesla’s sales due to his willingness to put his personal brand at risk may be an extreme case, but it’s a harsh warning, though at stake.
The engineers have bets that they can lead Trump for their profits and will feel some proof from his climb on tariffs. But pressing the 90-day pause button does not solve the underlying problem that caused the crisis.
Washington and Beijing quickly moved into an all-out trade war that would have been much more wary of much surprising technology investors if the far more catastrophic prospects of “mutual” tariffs had not been ahead of them. Further separation between the two countries also adds to Silicon Valley concerns that China will accelerate efforts to reduce the remaining dependencies to US technology. The spectacular advances Deepseek have made are supported by US technology executives as a warning about whether American companies are still globally competitive at the speed at which they are hungered for US technology.
Perhaps most frighteningly, the attack on Trump’s global trading system is likely to undermine the long-term trust of the United States as an ally and partner. Silicon Valley’s international clients aim to reduce their reliance on American technology, which they believe is strategically important to national security.
Europe was already looking for ways to promote alternatives to US-controlled cloud computing infrastructure. For a long time, China has wanted to break the US-led approach to setting global technical standards. They want to replace it with an alternative that supports their own high-tech companies. In the future, there will be a simpler international market for its equipment as traditional US allies are looking to diversify their tech suppliers.
The tech bosses and investors lined up behind Trump will undoubtedly comfort themselves that they are still making the right bet. The Democratic administration may be locking them in regulations, making it difficult to surpass China.
Perhaps without Trump’s provocation, a more fragmented and conflicted world was inevitable. But such counterfactuals lie next to the point. This is the world they helped bring, for better or worse.
richard.waters@ft.com
