The Trade War Comes for Tech

Soybeans aren’t the only casualty of China-U.S. trade tensions, which have escalated in the last 48 hours. Tech companies—reliant on cross-border flows of money, people, and components—are also feeling the burn.

Across China, trade tensions and slowing economic growth have diminished funding opportunities. Yesterday, Reuters reported that Sequoia Capital China—the Chinese arm of the Sand Hill Road power player—would downsize its investment staff by up to 20%.

And back in the U.S…

...the White House rejected Tesla’s application to exempt its Autopilot engine control unit (the “brain”) from a 25% import tariff, TechCrunch reports. In November, Tesla said it couldn’t find a U.S. manufacturer with its Shanghai supplier’s expertise and production capacity at a doable cost.

The White House wasn’t sold. The brain component is part of a strategic high-tech sector the U.S. doesn’t want China to become a leader in...so now, Tesla could struggle to produce cost-effective Autopilot computers.

Geopoli-tech-cal bottom line: Mike Eisenberg, a top tech investor, recently said it best to Recode: “You thought you’re in business. You’re actually in politics.”