RESEARCH TRIANGLE PARK – As talk of a trade war between the United States and China continues to grow with both countries imposing tariffs, North Carolina could face fallout.
President Trump imposed tariffs on some $60 billion worth of goods on Thursday. China responded with tariffs on some $3 billion worth of US imports, including pork. The latest tariff battle adds to the potential of job losses in North Carolina due to penalties imposed on solar panels in January. The Solar Energy Association has estimated that tariffs could lead to the loss of some 4,700 jobs.
While specifics about much of what Chinese imports face tariffs of up to 25 percent are not yet clear, the impact could be significant on such things as electronic devices could hit Lenovo. The international tech conglomerate is the world’s No. 2 manufacturer of PCs as well as a substantial player in the computer server and smartphone markets.
Lenovo operates global headquarters in Morrisville as well as Beijing. Most of its operations are based in China as is the majority of its manufacturing for personal computers, smartphones and other electronics. Its server business is based in Research Triangle Park.
And Smithfield Foods, the pork giant, has been owned by China-based WH Group since 2013. Pork imports from the US were among products that China announced Friday would be hit by tariffs.
However, Smithfield’s owner told Bloomberg News the immediate impact appears to be minimal.
“We do not think it will have a huge impact on our U.S. exporting business,” a WH spokesperson told Bloomberg News.
WH Group “gets about 57 percent of its revenue from the US” and “is assessing how to amend its strategy in response to the tariff,” Bloomberg added.
Also the US has discussed limiting Chinese investments in US technology companies. Global gaming and Internet giant Tencent owns some 40 percent of privately held Epic Games, which is based in Cary.
Earlier, the Trunp Administration imposed tariffs on solar panels. North Carolina is the second largest state behind California when it comes to production of solar power.
Durham-based Cree, meanwhile, is a global provider of semiconductors as well as LEDs (light emitting diodes) with substantial manufacturing operations in China.
‘Preparing for worst’
The South China Post reports that US tariffs could impact Lenovo products assembled in China as well as other devices such as Apple iPhones.
“Since consumer goods account for a large chunk of exports from China to the U.S., some Chinese manufacturers are preparing for the worst,” the China-based news site reports.
Andrew Choy, head of international tax services at EY Greater China, told the bews site that the impact of such tariffs could be “massive” and that US and Chinese companies with factories in China are “equally worried.”
Apple and Lenovo have not commented yet about the possible impact of tariffs.
Technology industry trade groups have warned against tariffs even as they have supported Trump Administration efforts to crack down on theft of intellectual property.
“We appreciate that the Trump Administration has listened to industry’s requests for a comment period. While we look forward to providing our feedback on the options the administration has outlined, we remain concerned with the administration’s focus on tariffs,” said Information Technology Industry Council president and CEO Dean Garfield said in a statement. “These measures could violate international obligations and – more importantly – would punish U.S. consumers, businesses, and workers for China’s action.”
Solar fallout
Perhaps even more than pork and PCs is the impact from those solar panel tariffs.
Solar farms have sprouted from places such as SAS headquarters campus in Cary to rural areas where a growing number of fields produce electricity, not crops. And Duke Energy has invested heavily in solar as it seeks to meet state-mandated levels of clean energy production.
Last year, several N.C. politicians lobbied against the solar panel tariffs, warning the move could cost jobs.
“The cost of generating solar energy from rooftop panels has plummeted by more than 85 percent in less than a decade, but President Trump’s action will reverse that progress,” warned Kevin Steinberger, policy analyst, Climate and Clean Energy Program at the Natural Resources Defense Council.” Higher-priced panels will dramatically reduce the pace of new solar energy installations, increase climate-changing emissions, and lead to significant job losses nationwide.”
