The prospect of Donald Trump returning to the White House is causing significant concern among major tech corporations. Trump’s proposed tariff policies, including a potential 10% across-the-board tariff on imports and a staggering 60% tariff on imports from China, are particularly worrisome. These measures would likely lead to a sharp increase in inflation and strengthen the US dollar. Goldman Sachs notes that such tariffs could create headwinds for stocks with high international revenue exposure due to the risk of retaliatory tariffs and heightened geopolitical tensions.
Impact on Big Tech Revenues
Big tech companies have substantial international sales exposure, with 59% of their total revenues coming from outside the United States, and 17% specifically from emerging markets. The materials sector follows closely behind. Companies that depend heavily on international suppliers would also face significant challenges from tariffs. Goldman Sachs screened S&P 1500 goods companies, highlighting that tech hardware stocks have the greatest exposure to suppliers from China.
Big tech corporations do not want a Trump in the White House because Trump has floated several potential tariff policies, including a 10% across-the-board tariff on imports along with a 60% tariff on imports from China. Therefore look for big tech corporations to support Joe Biden’s campaign for re-election.
Major Tech Companies Likely To Support Biden’s Re-election Campaign
Apple
Apple is one of the tech giants with significant revenue exposure to China, accounting for almost 20% of its total sales revenue. This makes China a crucial market for Apple, and any tariffs could severely impact its profitability.
Broadcom
In fiscal years 2021 and 2020, nearly 35% of Broadcom’s net revenue came from shipments or deliveries to China and Hong Kong. Despite the end customers being located in other countries, this significant revenue stream makes Broadcom vulnerable to tariffs.
Nvidia
Nvidia has seen its revenue from China decrease due to US export restrictions. However, China previously accounted for up to a quarter of Nvidia’s data center revenue. Currently, China represents a “mid-single-digit percentage” of Nvidia’s data center revenue, highlighting its ongoing importance.
Microsoft
Microsoft does not have a high percentage of sales revenue from China, with the majority of its business coming from the US, Europe, and other parts of Asia. However, it has relied on China for manufacturing, particularly for its Surface PCs.
Meta (Facebook)
In 2023, China contributed 10% of Meta’s total revenue, up from 6% in the preceding two years. This growth is significant, considering Meta’s main social media platforms are not officially accessible in China.
Qualcomm
Qualcomm is highly dependent on China, with 63% of its revenue coming from the Chinese market. This substantial exposure makes Qualcomm particularly vulnerable to any tariff increases.
Amphenol Corp
This company, dealing in electronic equipment and parts, derives 23% of its revenue from China. Like other tech firms, Amphenol would face challenges if tariffs were imposed.
Non-Tech Giants Opposed to Trump
Disney
Disney, which owns ABC News, has a significant presence in China, particularly in consumer products and theme parks. The company’s consumer product unit has seen double-digit growth in China in recent years. The Shanghai Disneyland theme park, opened in 2016, represents a major investment for Disney. Despite not disclosing specific China-related revenue figures, Disney’s overall revenue from the Asia Pacific region in 2023 was $4,871 million, indicating the importance of the Chinese market.
Comcast
Comcast, which owns NBC News, has anticipated significant growth in its China business. The Beijing Universal Resort, a joint venture involving Comcast’s NBCUniversal, opened in 2021 with an investment of approximately $6.84 billion. China is described as a critical market for Comcast, with expectations of generating significant revenue.
Paramount Global
Paramount Global, which owns CBS News, has international operations and content distribution in China. Although specific revenue figures are not provided, the company has received significant Chinese investment, indicating its market presence.
Warner Bros. Discovery
Warner Bros. Discovery, which owns CNN News, operates in over 220 countries and territories, including China. While specific revenue figures for China are not disclosed, the company’s appointment of a dedicated president for China operations in 2022 underscores the strategic importance of the Chinese market.
Final Thoughts
The potential return of Donald Trump to the White House and his proposed tariff policies pose a significant threat to big tech corporations and other major companies with substantial revenue exposure to China. These companies are likely to oppose and lobby against a Trump presidency to protect their international revenue streams and avoid the economic and geopolitical challenges that increased tariffs would bring.
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This content is provided for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to buy any security or other financial asset. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above content might not be suitable for your particular circumstances. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor.
