Donald Trump’s quest to reform the United States economy by implementing tariffs is moving quickly. The U.S. President had barely been back in the White House for a week when he started taking steps toward levying tariffs against Canada, Mexico and China.
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After a few days of negotiations, the tariffs against both U.S. neighbors have been paused after Mexico and Canada’s leaders reached agreements with Trump. However, the U.S.’s new 10% tariff against all Chinese imports has taken effect, and it is poised to severely impact many different industries and companies.
China’s government has already demonstrated that it won’t be backing down, though, announcing retaliatory tariffs on coal and liquefied natural gas. But that’s not the only bad news for U.S. companies coming out of Beijing.
China has decided to continue its strategy of striking back at the U.S. by investigating its companies.
U.S. President Donald Trump, left, and Xi Jinping, China’s president are currently in the middle of a new trade war that is impacting U.S. tech companies.
Multiple tech leaders are caught in the trade war crossfires
On Tuesday, February 4, the Chinese State Administration for Market Regulation released a statement announcing that it would be commencing an investigation into Google (GOOGL) .
According to the Financial Times, it will “focus on dominance of the US group’s Android operating system and any harm caused to Chinese phonemakers, such as Oppo and Xiaomi, which use the software.”
This isn’t the first time in recent months that China has investigated a U.S. tech company on these grounds.
Related: New trade war with China could be a major blow to top tech stocks
In December 2024, regulators announced that they would be investigating Nvidia (NVDA) on the grounds that the artificial intelligence (AI) leader might have committed antitrust violations shortly following restrictions from President Joe Biden’s AI chip exports to China.
James Lewis of the Center for Strategic and International Studies (CSIS), a nonpartisan think tank, offered context on China’s decision, stating, “The timing is not a coincidence. It’s mainly a message to the US government—the Chinese have decided they’re not just going to take sanction after sanction.”
TheStreet previously reported that this trend could have severe implications for tech stocks if China continued to scrutinize U.S. companies intensely.
Months later, that scrutiny doesn’t seem to be subsiding. Reports indicate that in addition to the Google and Nvidia investigations, China is also considering a probe into Intel (INTC) .
“The next step will be to see if Trump ratchets up tariffs on China and what that brings or if this is a path to trade negotiations,” reports Wall Street veteran Chris Versace, who adds that investors should be “prepared for uncertainty and continued volatility in the market.”
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A source cited by the Financial Times highlights that while “the nature of the probe into the US chipmaker remained unclear,” whether or not China actually moves forward with it could depend on how U.S.-China trade relations proceed.
Google and Nvidia are both targets, but one has more to lose
China may be doubling down on regulatory scrutiny for U.S. tech companies, but when it comes to Google, some experts have raised the question of how much it actually matters, as much of Google’s products and services aren’t utilized in China.
Per the Wall Street Journal:
“The direct impact on Alphabet may be limited. Google’s search engine and internet services for consumers have largely been unavailable in China since 2010. Google Translate, one of its last products in China, exited the market in 2022.”
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That said, the Google Android platform remains extremely popular in China, accounting for roughly 78% of the mobile operating system market. However, revenue from China only accounts for 1% of Google’s global sales.
Nvidia, by contrast, does significantly more business in China. During the fiscal third quarter of last year, it reported $5.42 billion in revenue from China, amounting to 15.4% of $35.08 billion in total revenue.
Additionally, Nvidia has made it clear that it favors regulation that allows it to sell more chips to China. The company criticized President Biden’s plan to impose further restrictions on AI chip exports, indicating that it sees China as a market with many potential customers.
Details regarding the probes are still emerging, and little information is available regarding the potential investigation into Intel.
While it is unclear whether Google will be severely impacted due to its limited exposure to the Chinese market, Nvidia has more to lose. This is likely why Nvidia CEO Jensen Huang is scheduled to meet with Trump at the White House this week to discuss AI policy, which could also affect future decisions regarding China.
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