Dow Jones down 85 points after Trump Administration blacklists Huawei
The Dow Jones is down after the Huawei ban affects the stocks of many US tech corporations.
The Dow Jones is down by 85 points after the US banned Chinese telecommunications company Huawei from conducting business with American corporations. This latest extension of the US-China trade impasse caused the stocks of many US tech companies that partner with Huawei like Intel to plummet.
Why did the Trump Administration ban Huawei from the US?
US President, Donald Trump, perceived Huawei as an ongoing national security threat to the US. The US Commerce Department explained why the Trump Administration recently placed Huawei on a trade blacklist.
‘This action stems from information available to the [ US Commerce] Department that provides a reasonable basis to conclude that Huawei is engaged in activities that are contrary to US national security or foreign policy interest,’ said the US Commerce Department.
How is the Huawei ban affecting American tech companies?
Many American tech companies had to halt its business dealings with Huawei, like Google. Google ended its work with Huawei that required the transfer of software and hardware. Google noted that it was complying with the Trump Administration’s order to ban Huawei imports.
‘We are complying with the order and reviewing the implications,’ said a Google spokesperson.
Google also noted that because of the ban, Huawei phones in the future will only be able to use Android’s public version and not Google's apps like YouTube.
‘Huawei will only be able to use the public version of Android and will not be able to get access to proprietary apps and services from Google,’ said the spokesperson.
What’s next for the Dow Jones and tech companies?
The Huawei trade ban and stalled US-China trade talks may continue to cause concern among investors. Willie Delwiche, investment strategist at R.W. Baird, noted that if the trade impasse lasts, there could be a longer negative impact on the US stock market.
‘At the margin, the global trade situation is deteriorating, and that increases uncertainty. These trade concerns are not going away,’ said Delwiche.
Chad Morganlander, senior portfolio manager at Washington Crossing Advisors, said that the Huawei ban could impact tech companies’ future earnings.
‘The political risk now has become a business risk. This could affect in a meaningful way earnings expectations for many tech names, ‘ said Morganlander.
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