Trump slaps 25% tariffs on Chinese networking equipment

ZTE and Huawei expect to be hit by sharp duty hike as critics say the move will hamper 5G development

Donald Trump

The US government has escalated its trade dispute with China by raising import tariffs on a swathe of Chinese-made components such as semiconductors and Wi-Fi routers.

Donald Trump commanded the US Trade Representative (USTR) on Friday to more than double the duty rate on Chinese imports on more than 5,700 categories, worth around $200 billion, from 10% to 25%.

These include products like semiconductors and optical fibre equipment, as well as other goods such as handbags and clothing. Some of these items were already subjected to a 25% import tariff - but this has now extended to all goods categorised under 'Section 301'.

"We are right where we want to be with China. Remember, they broke the deal with us and tried to renegotiate," US president Donald Trump tweeted.

"We will be taking in tens of billions of dollars in tariffs from China. Buyers of product [sic] can make it themselves in the USA (ideal), or buy it from non-tariffed countries."

The move is a clear attempt to curb the global influence of the Chinese state and is expected to hamper Chinese tech giants such as Huawei and ZTE. The former, in particular, has been at the heart of several disputes with the US government.

Trump first applied a 10% duty rate on Chinese goods from last year in a trade war that has seemingly also affected the wider tech industry. Apple, for example, cited this as a reason for its sluggish performance in financial results released in January.

"China deeply regrets that it will have to take necessary countermeasures," said a spokesperson for the Chinese Ministry of Commerce.

"The eleventh round of China-US high-level economic and trade consultations is underway. It is hoped that the US and the Chinese side will work together and work together to resolve existing problems through cooperation and consultation."

Similarly, democratic Federal Communications Commission (FCC) commissioner branded the move as a "tax on the future of technology".

"All the building blocks of 5G wireless and the internet of things - from modems to antennas to semiconductors - are subject to this new tax," she said. "It's not good - for consumers, innovation or US leadership."

The Telecoms Industry Association, a trade body for networking firms, also slammed the move, suggesting it would be harmful to US enterprise.

"Stability and predictability have long been recognized as cornerstones of a pro-business investment environment. For this reason, we are greatly concerned that the US government has announced the imposition of an additional tax on imports to take effect with little advance notice," said TIA senior vice president of government affairs Cinnamon Rogers.

"While we fully support the efforts of US negotiators to address unfair Chinese trade practices, tariffs on network equipment will hinder the US expansion of high-speed internet and next-generation network technologies such as 5G.

"In doing so, tariffs will adversely impact our technological competitiveness relative to other countries and hurt our economy and consumers."

Huawei has consistently argued that any measures that are taken against its company, from tariff hikes to an outright ban, would harm 5G development in the US, given how crucial the firm's equipment is to build out the underlying infrastructure.

Although the EU has taken a lighter approach to these Chinese tech giants, a US envoy earlier this year suggested that country that uses Huawei tech when building critical infrastructure could themselves face sanctions.

But research released last month highlighted just how crucial the firm's equipment may be to the UK economy and broader 5G development. According to the findings, a ban on Huawei in the UK means 5G could be delayed by 18-24 months and could cost the economy between 4.5 billion and 6.8 billion.

By contrast to the US, the UK government has taken a more lenient stance on Huawei despite the National Cyber Security Centre (NCSC) identifying a host of security concerns with the company. The report released in March found "significantly increased risk" to UK network operators based on new concerns with Huawei's approach to software and its devices.

However, despite this, the government has approved the Chinese giant's involvement in building the infrastructure for 5G networks in the UK, particularly regarding non-core components such as antennas.

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