Donald Trump isn’t president yet, but the actions he’s taking before even being sworn in may have already thrust the United States into a new trade war.
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Trump has made his policy plans extremely clear since winning the 2024 U.S. presidential election over Vice President Kamala Harris. His list includes doubling down on his plans to levy tariffs against some of the country’s top trade partners, specifically Mexico, Canada and China.
His plans include imposing 10-20% tariffs on all imported goods and a Chinese import tariff of at least 60%. Experts, such as Nobel laureate economist Paul Krugman, have predicted that these policies could have severely negative effects on the U.S. economy.
Krugman notes that the impact of Trump’s tariffs may vary, depending on whether the countries on the other end retaliate against the U.S. And China may already be taking action on that front, as evidenced by recent announcements.
A new trade war has put China on the offensive
Earlier this month, Chinese regulators announced they would investigate Nvidia (NVDA)  on suspicions that the artificial intelligence (AI) leader had violated antitrust laws. As TheStreet’s Martin Baccardax reported, this posed a threat to NVDA stock, as it indicated rising tensions in the chip market between the two nations.
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Now, however, these tensions may be escalating, and the brewing new trade war may be playing a part. China has announced that it plans to heavily scrutinize tech deals moving forward.
The country also recently imposed what the Center for Strategic and International Studies (CSIS) describes as its “most stringent critical minerals export restrictions yet,” targeting a commodity upon which many U.S. industries depend, including digital technology, energy and defense.
As reporter Rebecca Feng and colleagues at the Wall Street Journal note, these could hint at China’s plans for retaliation if Trump moves forward with his planned tariffs after taking office. The outlet highlights an example of a deal between U.S. tech leader Qualcomm (QCOM)  and Dutch company NXP Semiconductors which collapsed after failing to win China’s approval for the consequences of high Chinese regulatory scrutiny.Â
The WSJ team provides further context, writing,
“In that case, China’s leverage comes from the power it has to scrutinize global mergers—even for deals that don’t seem closely related to the country. Chinese regulators used a similar maneuver to torpedo Intel’s $5.2 billion deal in 2022 to buy Israel’s Tower Semiconductor, dealing a critical blow to a cornerstone of Intel’s ambitious turnaround plan.”
China’s recent actions could be seen as a preemptive response to Trump’s proposed tariffs. It’s true that tariffs are often used as a bargaining chip when one world leader wants to gain something. No policies have been implemented yet but Trump has made it clear that he is committed to making them a key cornerstone of his economic policy agenda.
Related: Ongoing problem may be costing Nvidia customers
Whenever tensions between the U.S. and China rise, especially when they center around economic matters, companies run the risk of being caught in the crossfire. But when increasing tech deal scrutiny is one of the factors pushing tensions up, companies in the space may face the possibility of deals falling through, as Qualcomm’s merger with NXP Semiconductors did.
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What this means for tech stocks
As of now, it is unclear if Nvidia stock will suffer long-term effects as a result of the Chinese regulatory probe. However, some companies in the electric vehicle (EV) space, such as Nio, have opted against using Thor, the flagship Nvidia autonomous driving chip in their upcoming cars.Â
While reports indicate this decision is due to delays with the chip’s production, further tensions between China and the U.S. could prompt more companies to buy from domestic chipmakers.
However, other leading tech stocks could be at risk if China’s scrutiny continues, particularly those who depend on critical minerals. Pini Althaus, chairman and CEO of Kaz Resources, spoke to TheStreet about what the trade war could mean for stocks, stating:
“China controls 70% of the global critical minerals supply chain and 85% of processing capabilities. This dominance leaves U.S. industries—from defense to automotive—unable to compete effectively in cost and availability of raw materials,” Althaus said.
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Althaus adds that the export ban “could cause immediate shortages, particularly in the semiconductor sector, as China produces 98% of the world’s gallium and 60% of its germanium. These materials are indispensable for chip manufacturing. China’s recent antitrust investigation into Nvidia is compounding the issue.”
Dev Nag, founder and CEO of QueryPal also discussed the issue, offering advice to companies. “Critical to success will be maintaining technological leadership while building resilient operational structures that can adapt to rapid regulatory changes in both markets,” he said. This may necessitate fundamental changes to traditional business models.
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