The US or cash? Huawei asks Poland to choose sides

Huawei has put its financially favourable foot forward, suggesting Poland will only get a cash boost if the vendor is allowed to participate in the 5G bonanza.

The role of Huawei in European networks has been under scrutiny for a considerable amount of time, and while it does appear it will be safe in numerous markets, Poland is one which is still hanging in the balance.

According to Reuters, Huawei is prepared to invest roughly $793 million in the country as long as it is allowed to sell equipment to the Polish telcos. While this might be enough to force some politicians into switching on the green-light, Poland is an area where Huawei has found itself in a bit of bother recently.

Back in January, a Chinese employee of Huawei and a Polish national working for Orange were both arrested on spying allegations by Polish security services. Evidence was not produced at the time, though concrete evidence has not been needed to ban Huawei in the US, or in countries such as Australia.

In terms of the US, Poland has had a strong relationship with the country for some time. Polish–US relations were officially established in 1919 and the country has remained one of the most stable allies of the US since. This filters down to the general public also, with Poland one of the most consistently pro-American nations in Europe and the world.

You also have to factor in more direct threats from the US. In February, the combative Secretary of State Mike Pompeo effectively suggested Eastern European nations would have to choose between working with the US or Huawei.

Looking at the Polish economy, a fractured relationship with the US would be difficult. Poland is the 24th largest export economy in the world, with the vast majority of exports heading to nations in Europe. However, the US is the largest single market outside of Europe for Poland, accounting for 2.7% according to Observatory of Economic Complexity, a MIT project.

With the US leaning so heavily on European allies to ban Huawei, seemingly as a means of putting pressure on the Chinese Government, Poland might turn out to be an interesting battle ground. Of course, you have to consider the cash incentive from Huawei.

Poland is effectively the Eastern European home ground of Huawei. The firm employs roughly 900 people in the country and will have a positive impact with its Polish supply chain. With further investments planned in the country, the direct impact of £793 million will keep the Polish Government happy, but there will be considerable knock-ons in other parts of the economy.

Another consideration for Poland will be market competition. Polish telcos will need a suitable amount of competition to ensure investments in network infrastructure is as low as possible. When you consider ARPU on mobile users, the demands become much more evident.

Orange’s Polish business currently has 9.7 million subscribers, each generating roughly £5.67 a month in revenue. For Play, Poland’s largest MNO, just over 12 million subscribers generate £6.71 a month for data services. For Polish telcos to generate ROI, competition between the network infrastructure vendors is clearly needed; banning Huawei might have some difficult implications to stomach.

Huawei knows this of course and is playing an excellent move. Poland will have to make a decision before too long; persist with its relationship with the US or effectively help Huawei gain traction in Eastern Europe.

Trade deal on the cards if Trump leaves Huawei alone

For weeks and weeks there has seemed to constantly be new stories to write about the US/China trade war, and on the eve of the G20 meeting, the dynamic duo haven’t disappointed.

This week, representatives of the 20 richest countries around the world will meet in Japan to discuss everything from fishing regulations through to finance and climate change. Telecommunications, and more specifically cybersecurity, will of course be on the agenda, and most importantly, it will feature in the meeting between President Donald Trump and President Xi Jinping.

Of all the bouts over the next couple of days, this will be the one everyone is paying attention to. The leaders of the worlds’ two largest economy, duking it out to gain supremacy. Trump has said he wants a trade deal, and so has Xi. These two nations not getting on is no good for anyone, but it seems neither wants to appear as weak and concede ground.

The latest development is coming out of Beijing. Xi has stated he is open to a trade deal between the two nations, but Trump would have to stop targeting Huawei as a proxy for passive and active aggression against the Chinese Government.

This is going to be a massive ask from the Chinese premier, as while Trump is fully willing to use companies as pawns in his greatest negotiation, the supporting cast in Congress might not be as willing. We’ve already seen this during the ZTE saga.

It might seem like a lifetime ago, but it was in mid-2018 ZTE found itself in the crosshairs of the White House. Trump built up the situation, seemingly as a demonstration of the power of the Oval Office, and once the point had been made he tried to stand down. But Congress stood in the way.

26 Senators, somewhat hardliners, attempted to block the de-escalation from Trump. They seemingly bought into the evil stories told by Trump as validation for such actions and weren’t willing to let the company off the hook. Trump wanted to play a game with ZTE as movable piece, but Congress wasn’t reading the rule book.

The same situation might happen here. Opinion in the US has been directed towards Huawei being the weapon of Chinese oppression on the world, and Trump has been the most vocal when it came to hyping the fear. Even if Trump does want to step down from this position to facilitate a deal, Congress might once again prevent him.

Trump seems to have done a good job in convincing politicians of the national security threat, and Congress does not seem to have the same game-playing attitude as Trump; if something is a national security threat, it will remain one. The opportunity of commercial gain will not change that.

This is of course assuming Trump wants to make a deal. Xi has played his hand, set out his demands with Huawei, and Trump seems to be just as combative. In interviews and tweets, the President has condemned Canada for tariffs on agricultural products, slammed India for its own tariffs and suggest China’s economy is ‘going down the tubes’.

Currently we have two Presidents who do not seem like they are going to shift. In their homelands they have created personas of strength, leaning on hawkish strategies not diplomacy. It would be fair to assume a continuation of the status quo.

G20 gets tough on tech tax as trade war gets agenda nod

20 bean-counters walk into a bar and ask for a tonic water. The barman asks who picking up the bill, and all fingers are pointed towards Silicon Valley.

In southern Japan, finance ministers and representatives of the central banking organizations have gathered to discuss the world of international and domestic finance. Of course, G20 is about much more than spreadsheets and calculators, but this weekend saw the accountants gather, while in the next room, ministers for trade and the digital economy were setting the world to rights.

Starting with the accountants, Silicon Valley is to remain the political punching bag of 2019.

“Specifically, in the area of international taxation, we will continue to have discussions on a review of the existing tax framework triggered by digitalization, in addition to fighting against tax avoidance and evasion,” Japanese Finance Minister Taro Aso said in a statement.

Of course, these politicians are savvy enough not to target a specific segment or highlight companies who are abusing the grey areas in the system. There are numerous different organizations outside of the tech sector who are mistreating globalisation trends for tax benefits, though the tech giants are the ones in the limelight right now.

In the G20 Finance Ministers and Central Bank Governors meeting, new ideas have been tabled suggesting governments around the world will be cracking down on the creative accounting techniques which are becoming ever-so-more common.

According to a communique seen by Reuters, the newly proposed rules would not only make it more difficult for the tech giants to make use of low-tax countries for their benefit, it would also work the other direction. Countries like Ireland, who have benefitted from offering loopholes to the tech giants, would have their freedoms curbed in the pursuit of fairness and a more level global approach.

The new rules would propose two different approaches to taxation. Firstly, companies would have to pay fair tax on the revenues which are derived in the country, and secondly, should the accountants find a way around these rules, a global minimum tax rate could also be introduced. It is the tax version of the Swiss Cheese model; the more layers which are incorporated, the more difficult it is to effectively create a tax evasion model for these organizations to follow.

For countries like the UK and France, this is a win, though the likes of Ireland, Luxembourg and the US will find the outcome frustrating. While the UK and France have been pushing for more stringent tax rules, Ireland and Luxembourg are attempting to protect the light-touch regulatory environments which benefits their own societies but screws everyone else.

The US has suggested any change to taxes was discriminatory to its own companies, effectively a raid on the US economy. Although US Treasury Secretary Steven Mnuchin has seemed relatively cordial in reaction to developments, it remains to see whether any further strain is placed on international relationships. The US is already struggling to maintain strong links with certain governments, and this presents another risk to stress relationships.

Mnuchin has also found himself in the news regarding the Huawei conundrum.

The US finance chief has said in Fukuoka that a trade deal between the US and China could ease the firm stance which is threatening to provide collateral damage all around the world. The statement quotes President Donald Trump, who made the suggestion over Twitter a few months back.

For those firms impacted by the ban, the reiteration of this statement might come as some relief, though critics will become increasingly frustrated. It seems the White House has little concern for collateral damage as long as its own ambitions are fulfilled. For the firms who supply products to Huawei or investors who have been left short by such a ban, the ease in which their livelihoods can be used by the White House as a disposable bargaining chip must be incredibly worrying.

This of course was a topic of conversation at the Ministerial Meeting on Trade and Digital Economy also.

“We continued our dialogue to mitigate risks and enhance confidence among exporters and investors, as we committed to do in Mar del Plata last year,” a briefing document states. “We affirmed the need to handle trade tensions and to foster mutually beneficial trade relations.”

While it might seem like a throw-away comment, perhaps we should appreciate the significance of recognising the situation. In most circumstances, governments would steer clear and allow the bickering duo to continue their chest-beating, however in recognising the circumstances perhaps we are closer to someone stepping in and de-escalating the situation.

Clearly neither the US or China can be trusted to be mature and manage the saga for a net-gain, so it might need a third-party to step in. As it stands, no-one is benefiting, and everyone is losing. The winner of this trade war will be the one which can be the least negatively impacted; that should not be considered an effective way to manage international relations.

Trump set to raise the stakes over Huawei during UK visit

US President Trump will reportedly threaten to withdraw some intelligence cooperation with the UK unless it bans Huawei, when he visits.

This insight into Trump’s intentions comes courtesy of the FT, which says it has been chatting to people involved in organising the visit. Those people told it that the Prez will definitely raise the matter when he’s over here and he’s not happy about the UK’s current refusal to do what it’s told by the US and ban Huawei outright from its 5G network.

“The president is preparing to repeat the message that Chinese involvement in 5G could pose significant challenges for US-UK intelligence co-operation. He is prepared to go hard on this issue,” an unnamed insider told the FT. Trump has always been a ‘go hard or go home’ kind of guy, so it doesn’t really come as a great surprise that he intends to persist with this approach when he’s over here.

Any awkwardness between Trump and out-going UK PM May will be significantly amplified by the leak, a month ago, that the government was planning to go US advice and let Huawei be involved in UK 5G to some extent. This was so embarrassing to May that she sacked her own Secretary of Defence on suspicion of being the leaker – an allegation he emphatically denied.

No more surprising than the FT story is the revelation from AFP that Huawei has long been the recipient of generous state assistance from China. Huawei has apparently received hundreds of millions of dollar in grants, been given land at a discount and even cheap loans to use as incentives for customers to sign on the dotted line.

Apparently Huawei annual reports reveal $1.6 billion in back-handers from the Chinese government over the past 10 year, at least half of which don’t seem to have come with any strings attached. The export credit side of things is supposed to be regulated under international rules, but we’re told that China has refused to abide by them.

While none of this behaviour comes as a big shock, it does feed into the broader US narrative of China cheating at global trade. Once more Huawei is being used as a proxy in this dispute and it’s hard to see what it can do about it. It’s no secret that China has done a lot to support internal champions, but it’s hardly alone in that respect.

So this particular side of the trade dispute comes down to degree. The US and Europe will claim their protectionism is within international trade rules while China’s isn’t. It could be that even the security concerns that have been the main stick to beat Huawei, and by extension the UK, with are just a proxy for this broader drive to force China to abide by international rules and that they won’t go away until it does.

Work with Huawei, or us, but not both – US Government

US Secretary of State Mike Pompeo has upped the ante with the anti-China rhetoric, declaring the US will not partner with countries who work with Huawei.

According to Fox Business, Pompeo has dropped the inference and made a statement which many countries will be cringing to hear. You no-longer have to read between the lines; it them or us Pompeo is declaring.

“If a country adopts this and puts it in some of their critical information systems, we won’t be able to share information with them,” said Pompeo. “In some cases, there’s risk – we won’t even be able to co-locate American resources, an American embassy and American military outpost.”

For countries like the UK and Germany, this is worst case scenario. These are countries which have vested interests from an economic perspective in both countries, and such is the state of affairs in the telco world, few can afford to strip Huawei out of the vendor mix. Pompeo is referring to administrative and military functions right now, but it would be fair to assume this could be extended to US commerce.

It’s a very tricky position to be in.

On one hand, there simply aren’t enough vendors in certain segments of the telco industry to generate suitable levels of competition to create the most viable economic position to fuel future infrastructure ambitions. Secondly, taking a vendor such as Huawei, arguably the leader in radio equipment, out of the mix would-be worst-case scenario for a technologist. Why would you want to ignore the best kit available?

However, on the other side of the coin, the security concerns are persistent, and do have some credibility. Evidence is circumstantial, some of the claims are hearsay, however you cannot ignore the risk. China does have a law which would force nationals to comply with its ambitions.

Should Pompeo’s statement evolve into more than chest-beating, numerous countries will find themselves in a painful tug-of-war. It does look like European nations are resisting the US’ Governments call to stonewall China, but this could come at a cost.

The US and China are two major trade partners of almost every economy in the world. To work with the US, you’ll have to ban Huawei, but if you ban Huawei you can almost guarantee there will be some form of reciprocal action from the Chinese Government.

The UK is an excellent example. Huawei has recently released a statement reiterating the investments the company has made in the UK, as well as the number of people who are employed as a direct and indirect result of its investments. Should the UK Government want to seize the post-Brexit trade carrot which has been dangled by the White House, some sort of action against China will be required. There is going to be a loss somewhere.

Poland is in a similar position. Pompeo is quoted as seeing “real progress” in the country after meeting Ministers in Warsaw, though if Poland was to ban Huawei it would certainly have an economic and societal impact; Huawei currently uses the country as its Eastern European HQ, employing roughly 900 people and investing substantial funds.

Over in Germany, China is a significant market for its automotive and heavy industrial exports, though if it was to submit to the US Government demands, you can guarantee there will be some sort of kickback.

All of these countries are now stuck between a rock and a hard place. Europe is proving to be a critical battleground in the US/Chinese war for technological supremacy, and while some narcissists might crave the attention, this is starting to turn into an impossible decision.

“No way US can crush us” – Huawei founder hits back

The usually publicity-shy Huawei founder Ren Zhengfei has hit back at what he perceives as a politically motivated attack, declaring if “the lights go out in the West, the East will shine”.

Although the US government has sustained the anti-China rhetoric over the last couple of months, with Huawei being the focal point of any aggression, the firm is holding strong. That is the message from Zhengfei, a usually media-adverse individual who is currently being carted around Europe in a show of strength against the White House. The aim for Huawei is to demonstrate transparency, and it does seem to be working in Europe.

“There’s no way the world can crush us,” said Zhengfei, in an interview with the BBC. “The world needs Huawei because we are more advanced. Even if they persuade more countries not to use us temporarily, we could just scale things down a bit. And because the US keeps targeting us and finding fault with us, it has forced us to improve our products and services.

“If the lights go out in the West, the East will shine. And if the North goes dark, there is still the South. America does not represent the world.”

While these comments are unusually aggressive for a man who does not like the limelight, they could prove as the perfect antagonistic weapon against President Trump. Zhengfei is sending a simple message across the Atlantic in this interview; the world is not siding with you in this quest.

Huawei has become a proxy in the overarching conflict between the US and China, though it is certainly faring better now than it did a couple of months back. During the initial exchanges, there was a considerable amount of collateral damage heading Huawei’s direction. Banned from providing equipment in Australia, New Zealand and Japan, plus other omissions in countries such as South Korea, it was an ominous sign. But Europe is seemingly not agreeing with Trump.

In the wider US/China dispute, Europe is a critical battle ground. As a bloc, the European Union is the second largest economy in the world. For both China and the US, winning favour would go a long-way to establishing political and economic dominance over the other. And Europe does not seem to share the same deep-rooted distaste for China as the US is currently harbouring.

Many European economies have established trade relationships with the Chinese, and while there are long-standing partnerships with the US also, none of these countries seem to want to readily shun the Chinese. This is the advantage which Huawei has in Europe, these are not nations which will so easily bow to the outside influence of the US.

In the UK, for instance, China is the 5th largest trade partner, as it is also in Germany. Its down in 7th for France, but still accounts for 4.3% of total trade, as it is in Italy for 3% of the total. For Belgium, China is the third largest partner outside of the European Union, while it is the second largest outside the bloc for the Netherlands. Trade with China is too important for the member states to consider siding with the US in the larger international conflict.

Of course, what you have to bear in mind is the over-arching European Commission supposedly considering ways to ban Chinese companies from contributing to critical infrastructure programmes. US Vice President Mike Pence has been touring Europe to talk up the importance of making a stance against China, and also dropping hints other European nations should ditch the Union, but success with the individual member states is looking far more limited.

With Germany and the UK seemingly favouring an approach which would heighten security protocols but still allow Huawei to operate, the Chinese firm is seemingly winning on the continent. With the US throwing political heavyweights at the nation states, Secretary of State Mike Pompeo was another to join the crusade of fear-mongering, the US might soon become quite agitated. Huawei’s resistance might infuriate the Oval Office, but the inability to bend Europe into its own image of perfection might will frustrate.

Europe was supposed to be a political boost for the US ambitions against China. This is of course the bloc which the US saved from the ravages of World War II and also a steadfast set of allies over the last few decades. Whatever the US has done, Europe has generally agreed to. But it seems the brash and aggressive style is not palatable to the conscientious and risk-adverse Europeans.

For Huawei, this is a massive battle. Europe as a whole is the largest market outside of China for Huawei, representing billions of dollars’ worth of business. However, its not just the network infrastructure ambitions at risk her, let’s not forget the consumer business has been making considerable progress across the bloc as well. The fact Huawei is wheeling Zhengfei around demonstrates how important this region is to the company.

President Trump sees himself as one of life’s winners. As the self-proclaimed ‘deal marker’, this is a man who is used to getting his way. With the power of the White House and US economy behind him, this is not an outcome he would have imagined. The stubbornness of the Europeans might force the White House into more drastic action before too long.

China at the centre of US/Hungary passive aggressive spat

US Secretary of State Mike Pompeo has joined the European roadshow with the intention of lobbying other governments towards a China ban, but Hungary’s message is clear: mind your own business.

“We Hungarians, the Hungarian Government, has based our foreign policy on mutual respect, and we think that the world is not going to be a better place if some countries do spend their times by intervening in internal political affairs of other countries or lecturing other countries,” said Péter Szijjártó, the Hungarian Foreign Minister.

It’s a textbook example of political posturing and passive aggression. Szijjártó can’t get into an outright shouting match with Pompeo, but as so many politicians do Szijjártó is wearing a smile, talking calmly with very intellectual and soothing language. But don’t be fooled by the charm, Szijjártó is telling Pompeo to back off.

To understand why Szijjártó floating his passive aggressive skills, you must go back to Pompeo’s own comments.

“What’s imperative is that we share with them the things we know about the risks that Huawei’s presence in their networks presents: actual risks to their own people, to the loss of privacy protections for their own people, the risk that China will use this data in a way that is not the best interest of Hungary,” Pompeo stated.

“But second, we have seen this around the world, it also makes it more difficult for America to be present; that is, if that equipment is co-located in places where we have important American systems, it makes it more difficult for us to partner alongside them.”

In terms of getting their own way, US politicians are the experts at perfectly crafted passive aggressive rhetoric. Pompeo’s message is simple; you can of course make your own decision, but if you continue to do business with Huawei and China, you won’t find future success in the US. Pompeo is effectively using the economic attractiveness of the US as a partner as an indirect threat to bend Hungary to its will.

And China is once again at the centre of the spat.

To be fair, it should hardly come as a surprise the Hungarians are not particularly welcoming of the US politician. Yesterday, a US official described Eastern European governments as having a “higher propensity to corruption” than Western European counterparts. There are of course examples which prove this point but taking such a broad-brush approach to an incredibly diverse region of the world runs the risk of offending a few people. Hungary is clearly one of those nations which has taken exception to the remark.

The US has had some notable success in turning governments against Huawei specifically and China generally, Australia and Japan are two good examples, but in Europe there have been challenges. Various US delegations have been whispering in the ears of European politicians, warning of the dangers of doing business with Chinese companies, and while there might be some heightened security requirements, outright bans have been hard for the US to come by.

Hungary is now another which seems to be turning against the desires of the US.

“If you look at our cooperation with China, we represent 1.2” of the trade between the European Union and the People’s Republic of China,” said Szijjártó. “If you look at that Chinese company which is very often in the news nowadays regarding telecommunication, are they present in Hungary? Yes. Who are their major contractors? A German and a British company. So when it comes to China, I think hypocrisy should be left finally behind.

“We are usually accused, Central Europeans, that the so-called 16+1 format is so much breaking the European Union. Now out of the 16 countries involved in this cooperation, 11 are members of the European Union. Do you know how many percent of EU-China trade 11 of us represent? Less than 10 percent. So I think it’s not us that will be the game-changers in the relationship between, let’s say, the Western world and China.”

The US has certainly inflicted damage to Huawei as a business and China as a trading partner, but success in turning the European nations against the Asian superpower is looking limited right now. The US/China battle for international economic supremacy has certainly been an interesting one, though the current calming of tensions might just be rattling politicians into another outrightly aggressive move.

All data-roads lead to Tokyo after EU’s thumbs up

The European Commission has given its nod of approval for data protection rules drawn up in Japan, effectively extending GDPR protections for European citizens to the Asian country.

On top of the current data protection regulations in Japan, an additional set of rules have been created adding safeguards to guarantee that data transferred from the EU will be subject to the same protection as European standards. The supplementary rules will be binding on Japanese companies importing data from the EU and enforceable by the Japanese regulator and courts.

“This adequacy decision creates the world’s largest area of safe data flows,” said Věra Jourová, Commissioner for Justice, Consumers and Gender Equality.

“Europeans’ data will benefit from high privacy standards when their data is transferred to Japan. Our companies will also benefit from a privileged access to a 127 million consumers’ market. Investing in privacy pays off; this arrangement will serve as an example for future partnerships in this key area and help setting global standards.”

Starting with the rules, new conditions will be set into play regarding the protection of data, the rights of European citizens to request further information on usage, as well as further requirements dictating what data can be transferred out of Japan to other nations. Protections have also been put in place with regard to how intelligence and law enforcement agencies can use or retain data, while a complaint-handling mechanism has also been introduced.

With these new rules the road to Tokyo is now open, allowing data to freely transfer between Japan and all members of the European Economic Area (EEA), Iceland, Liechtenstein and Norway. It’s a win for the bureaucrats which have been looking to develop deeper relationships, creating a trading bloc which can provide more competition for the likes of the US and China.

“This is the first time that such a recognition takes place under the GDPR and in a reciprocal manner. As of today, Japan has adopted an equivalent decision for data transferred to the EEA,” said Tanguy Van Overstraeten, TMT Partner and Global Head of Data Protection at law firm Linklaters.

“This major milestone puts both Japan and the EU in a unique position, strengthening the recently adopted Economic Partnership Agreement (EPA) between the EU and Japan. The EPA will enter into effect on 1 February 2019, creating an open trading area covering over 600 million people and almost one third of the world’s GDP.”

For Japan enthusiasts, this announcement will come as great news, especially ahead of the EU-Japan trade agreement which is set to come into force next month. This tie up will create an open trading zone covering 635 million people and almost one third of the world’s total GDP, and the first ever bilateral framework agreement between the two parties.

As part of the new relationship the vast majority of the €1 billion of duties paid annually by EU companies exporting to Japan will be removed, as well as regulatory barriers inhibiting some trade, for example on car exports.

The European Commission might have its critics throughout the world, but this doesn’t look like anything aside from a good bit of business.

Qualcomm-NXP deal could be back on

The Chinese president would be open to approving the acquisition of NXP should Qualcomm propose again, according to the White House.

The American and Chinese presidents met during the G20 event in Argentina to cover an array of thorny issues. The White House press secretary’s statement on 1 December included the key points. On trade, “President Trump has agreed that on January 1, 2019, he will leave the tariffs on $200 billion worth of product at the 10% rate, and not raise it to 25% at this time.”

However, this is conditional on a few concessions from China, including substantial increased purchase of American products, and structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture. “If at the end of this period of time, the parties are unable to reach an agreement, the 10% tariffs will be raised to 25%”, the statement said.

The last point on the statement related to Qualcomm’s proposed acquisition of NXP.  The statement said “President Xi also stated that he is open to approving the previously unapproved Qualcomm-NXP deal should it again be presented to him.” The deal, after repeatedly missing extended deadlines, was called off in July after China had refused to approve it.

As is typical with meetings like this, each party has been trumpeting its own triumphs. Bloomberg compared how the results were communicated differently in the two countries’ official channels. The Qualcomm-NXP reconsideration, together with the 90-day deadline and a few other points, was not mentioned by the Chinese official media. In a more bizarre twist, the official translation of the White House statement produced by the American Embassy in China is said to have been blocked from sharing on WeChat, the popular social network in China.

US/China trade war back on track

Just as President Trump is buddying up with North Korea, the US relationship with China is about to tank again. On July 6 the US will officially introduce tariffs on Chinese goods entering the country.

The $50 billion of tariffs have been discussed in great detail over the last couple of months, the world is of course taking advantage of the always reasonable, consistently proportional and often timid US, so the news should come as little surprise. What we don’t know is how big this spat will become.

The 1300-strong list of products subject to tariffs was released back in April, and covers various different industries. The one we want to know about is of course telecommunications and technology, and while there are some very technical specifications, the Trump administration seems to be targeting next generation technology in the China’s Made in China 2025 strategic plan.

“My great friendship with President Xi of China and our country’s relationship with China are both very important to me,” Trump said in a statement. “Trade between our nations, however, has been very unfair, for a very long time. This situation is no longer sustainable.

“China has, for example, long been engaging in several unfair practices related to the acquisition of American intellectual property and technology. These practices, documented in an extensive report published by the United States Trade Representative (USTR) on March 22, 2018, harm our economic and national security and deepen our already massive trade imbalance with China.”

China has of course promised to retaliate, which will be met by further tariffs from the US. This is the unknown; how immature are these politicians prepared to be?

Christine Lagarde of the International Monetary Fund has already warned of the consequences of tariffs, believing there will only be negative consequences for all parties involved and global trade on the whole, however that seems to be of little concern. Trump wants to make a point, and this is not a man who is known for admitting a mistake. How far will this trade war escalate and for how much longer can these supposedly intelligent people ignore the advice of economic experts.

China has yet to take any notable actions in retaliation to Trump’s economic aggression, but we suspect it might not be too long.