The United States and China are racing to dominate the next generation of ultrafast wireless networks, known as 5G. The faster networks will fuel the use of artificial intelligence in driverless cars and robotics.
WASHINGTON — President Trump says his trade war with China will protect America’s dominance and derail Beijing’s plan for technological and economic supremacy.
But as the fight kicks into high gear this week, American tech and telecom companies are warning that the industry’s growing reliance on products made and assembled in China means they are more likely to be casualties, not victors, in the skirmish.
Like American automakers and other manufacturers, the tech sector has increasingly outsourced production to China, where manufacturing and assembly of products is cheaper than in the United States. In recent decades, Intel, Dell, and Apple began shifting manufacturing overseas to take advantage of lower labor costs and align operations closer to customers in emerging markets.
Intel, for instance, designs and manufactures most semiconductors in the United States but relies on Chinese facilities for assembly of their chips, which will now be taxed. Moving those manufacturing and assembly operations outside of China is unrealistic, the company has warned, saying “it is too expensive to relocate established and integrated supply chains.”
Google, Dell, IBM and others say the tariffs will increase costs for companies and consumers, hindering America’s ability to dominate the next generation of technology, like 5G wireless networks. Rising prices, the industries say, will slow business growth, increase costs for consumers and put other nations, like China, in a more competitive position to dominate tech.
Mr. Trump’s next round of tariffs on $200 billion worth of Chinese goods goes into effect on Monday, hitting thousands of consumer products from handbags to refrigerators to bicycles. The tariffs will also hit the tech and telecom companies that provide much of the gear that powers the internet, mobile networks, data storage and other technology. United States customs will begin collecting a tax on circuit boards, semiconductors, cell tower radios, modems and other products made and assembled in China and exported into America.
Those tariffs, Intel warned in a letter last month, are “a game changer for the American consumer.” The tariffs begin at a rate of 10 percent and increase to 25 percent next January.
“The tariffs affect the heart of the infrastructure of the internet,” said Rob Atkinson, president of the Information Technology & Innovation Foundation, a think tank financed by tech companies including Microsoft, Google and Intel. “If we are going to impose tariffs on Chinese goods, we should impose them on items that hurt the Chinese, not us.”
Mr. Trump does not share that view, seeing the tariffs as a weapon to force China to change trade practices that the administration — and many companies, including tech firms — say are unfair.