The trade war between the United States and China has been going on since the start of the US administration under President Donald Trump that has made some notable impact on the economy of China. The trade conflict started with periodical changes to American tariff policy, threats against the Chinese companies like Huawei and ZTE, later China responded with no to the Qualcomm and NXP deal and launched new restrictions on investment in U.S. startups and telecom infrastructure.
Before the pandemic US-China came close to an all agreed trade policy but since the COVID-19 Pandemic has started global economies have collapsed including the two superpowers of the world are facing crucial time with their economies. China is trying to bounce back with the local business since the global demand has almost vanished and the USA is still struggling to contains the spread of the virus.
Announcements made this week may have a bigger impact on the US-China trade in the future.
In first of the series of announcements — the US Department of Commerce under the Trump administration announced to ban Huawei from using U.S software and hardware in certain strategic semiconductor processes that intents to limit Huawei from growing its market power and technological capabilities.
The administration has already announced the extension of the government’s export ban on Huawei and ZTE.
Second, in the series is the announcement from TSMC that is the world’s largest chip manufacturer and also the most advanced chipmaker in the world. TSMC announced that the company will invest and launch a major, $12 billion facility in Arizona, USA. The release notes that the new factory will be able to produce the world’s most advanced 5-nanometer chips when it will be launched in a couple of years.
This announcement comes after long weeks of debate in Washington aimed to cut off TSMC’s ability to produce chipsets for mainland Chinese companies like Huawei which TSMC has also said will impact its profitability and ability to invest in further R&D.
The past few months of COVID-19 have changed the mathematics of Trade between US and China and the United States has elections this year and the favorable for China has dropped in high number as per the PEW Research.
We can expect more of these announcements in the future and there is almost no hope that there will be renegotiations of the US-China trade deal.
Taiwan’s decisions are also huge in these scenarios as there are political tensions rising between the world in relation to China and its foreign policies.
The Economist has also published an article titled ‘Has COVID-19 killed globalization?’