Former President Donald Trump’s potential return to office with noted China hawks in his administration may signal a tougher stance in the US-China tech war, analysts at Jefferies said.
“We were cautiously optimistic about US tech restrictions against China under Trump, but are likely wrong,” Jefferies analysts wrote this week, citing the appointments of Mike Waltz as National Security Advisor and Marco Rubio as Secretary of State, both of whom have strongly advocated for curbing China's tech ambitions.
Jefferies flagged its concerns over advanced chip manufacturing, AI restrictions, and the possible return of delisting risks for Chinese firms.
Trump’s administration is expected to be more “pro-business” and less reliant on allied support than Biden's, Jefferies noted, meaning the US may avoid pressuring allies like the Netherlands, Japan, and South Korea to restrict exports to China, giving China some breathing room in sourcing semiconductor production equipment. Trump's picks, however, signal an intent to take a harder line on technology and investment ties with China.
Three key risks include a potential ban on firms like TSMC and Samsung from manufacturing chips at 7nm and below for China, a move that would create broader restrictions beyond AI technology. “Trump’s team may use a simple 7nm threshold, even if that impacts non-AI sectors,” the analysts said.
Jefferies also expects restrictions may expand to countries where Chinese companies are developing AI capabilities. “We believe upsetting allies would not be Trump’s concern,” the analysts wrote, adding that Trump’s stance could lead to restrictions on advanced chip exports to specific nations.
The delisting risk for Chinese ADRs could also return, as Trump’s past policies showed a willingness to push Chinese companies off US capital markets. “Trump does not believe the US capital market should support Chinese companies,” the analysts noted, though such moves could depend on his choice for Treasury Secretary.
Jefferies said the tougher stance reflects Trump’s broader approach during his previous administration, which imposed tariffs, sanctioned Huawei, and sought to de-list Chinese companies from US stock exchanges.