The global battle over tech could cost $3.5 trillion

As tensions between Washington and Beijing continue to escalate, Wall Street is warning that a new tech Cold War could cost the industry trillions of dollars.

The latest: In a recent note to clients, Deutsche Bank tech strategist Apjit Walia said that supply and demand disruptions, along with the construction of a “tech wall” that forces companies to create two sets of standards to operate in the United States and China, could cost companies $3.5 trillion over the next five years.

The loss of Chinese demand for Western tech products is particularly concerning, Walia said. China accounts for 13% of tech sector revenues globally, adding up to roughly $730 billion per year, he noted. Moving supply chains out of China, and efforts to comply with vastly different regulatory systems in China and the United States, would also prove costly.

These tensions are reflected in the fight over TikTok. The United States is considering banning the popular video app, which is owned by Beijing-based startup ByteDance.

In the hot seat

TikTok has been repeatedly attacked by US politicians who say it is a threat to national security because of its ties to China, alleging that the company could be compelled to divulge information to the Chinese Communist Party.

TikTok has taken pains to distance itself from China. It recently hired an American CEO and argues that it stores Americans’ data on US-based servers.

My CNN Business colleague Brian Fung reports that the Trump administration’s success in cracking down on Huawei — which the United Kingdom last week banned from its 5G networks, reversing a previous decision — could embolden the president to take on TikTok next.

While the US administration would be well within its rights to bar downloads on federal government devices, it’s less clear how it could force states or the private sector to follow suit. But it may not need to. At least one company, Wells Fargo, has already told employees not to install TikTok on company devices.