Remember yesterday when The Trump administration confidently proclaimed victory in the US-China trade wars, explaining that they believe the threats are working.
“China basically surrendered [with the Xi speech] and he [Trump] is probably going to put even more pressure on them before he accepts whatever their bottom line becomes,” said a person familiar with White House views.
Administration officials argue the Chinese are already bending to the U.S.’s will:
“It was the most conciliatory thing we’ve heard since the whole discussion began,” said a White House official. “Up to then, it was mean, nasty, cruel name-calling.”
China vehemently denied this acquiescence and this morning have struck back, albeit subtley.
The Wall Street Journal reports that unidentified people familiar with the matter say that China is holding up deal reviews that could clear the way for U.S. companies Qualcomm and Bain Capital to make multi billion dollar acquisition of semiconductor companies.
The delay could end up quashing Qualcomm’s planned $44 billion acquisition of Dutch semiconductor company NXP Semiconductors NV, a deal widely seen as critical to Qualcomm’s future, according to one person familiar with the matter.
And both companies’ share prices are sliding…
WSJ notes that China is the only country that has not yet signed off on that deal, along with Toshiba Corp.’splanned $19 billion sale of its chip unit to a consortium led by U.S. private-equity firm Bain Capital. Neither deal is likely to move forward amid the looming trade war, the people said.
“The review process is basically on pause because of the trade tension,” a senior Toshiba official said. “We’ve been afraid of that.”
Stalling these deals is another possible leverage point for China as it seeks to fend off the Trump’s administration’s plans to impose tariffs on up to $150 billion in Chinese goods in response to what it says are unfair trade practices.
While markets had seemed ready to shrug off any looming trade war – which The Fed’s Kashkari called “enormously bad” for the US economy – it seems we are not even out of the first inning in this fight…