Will Samsung gain from the trade war?
Asian markets corrected in May, following the previous month’s feast. Carnegie Asia fell 6.8 %.
Asian markets were sold off this month, following strong springtime performance. A breakdown in trade talks between the US and China naturally caused concerns to spread. Although both sides gave assurances this spring that negotiations were making progress, it became obvious in May that they deeply disagree on multiple issues. Donald Trump is unhappy, despite China making a number of concessions to reduce the US trade deficit. The conflict is about other issues that are more important to the US, and the main stumbling blocks are protection of patent rights, industrial espionage and dissatisfaction with state-owned Chinese companies competing on unequal terms. Also, the US wants to maintain its number-one position as world leader, and China is challenging this, which does not please Trump.
The US upped its tariffs on imports of Chinese goods from 10% to 25% to a total of USD 200 billion. It also blocked exports of US technology to certain Chinese companies such as Huawei, one of the world’s largest telecom equipment manufacturers. China has already threatened to impose higher tariffs on imports from the US, and is considering restricting exports to the US of certain rare metals used in the semiconductor industry that are important for the mobile phone industry.
Analysts are cutting sales forecasts for Apple iPhones in China by 50%, which means weaker sales for the entire chain of Apple subcontractors in Taiwan and South Korea.
Increased protectionism in a world where all business models and supply chains are built on the basis of free trade and globalisation benefits no one. Not even the US has any practical benefit from this development. Nevertheless, one winner may be Samsung Electronics, which could increase its market share for mobile phones as Huawei’s global sales are hit. It remains to be seen whether this is merely a negotiating tactic between the two parties, and June’s summit in Tokyo will probably give us the answer.