A TikTok Ban Could Impact Apple and Tesla in China

A potential ban on TikTok in the US could have negative repercussions for American tech giants like Apple and Tesla, particularly in China.

China's Warning Against TikTok Ban

China's foreign ministry has cautioned that banning TikTok could lead to consequences for US companies operating in China. The ministry stated that such actions would backfire on the US, hinting at possible retaliatory measures.

Legislation and Potential Impact

The US House of Representatives recently passed a bill that would require ByteDance, the parent company of TikTok, to sell the platform to a non-Chinese entity within six months or face removal from US app stores. While the bill's fate in the Senate remains uncertain, analysts predict potential challenges from TikTok and foresee a 25% chance of a ban materializing.

Risks for Apple and Tesla

If a TikTok ban were to be enforced, China could respond with brand damage campaigns and operational restrictions that may affect companies like Apple and Tesla. Gene Munster, a managing partner at Deepwater Asset Management, highlighted the possibility of propaganda campaigns and operational hurdles as retaliatory actions from China.

Impact on American Companies in China

Aside from Apple and Tesla, other US companies such as Wynn Resorts, Las Vegas Sands, Qualcomm, Texas Instruments, and IPG Photonics, which generate significant revenues in China, could also face challenges. The rise of patriotism-driven consumer behavior in China adds another layer of complexity to the situation.

Outlook for Apple and Tesla

If the TikTok ban leads to a trade war between the US and China, Apple's business in China could see a decline from 18% to 12-15%. On the other hand, Tesla, which has already faced scrutiny in China, might experience a lesser impact compared to Apple.

Both companies are closely monitoring the situation, but have not provided official comments on the matter.

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By: insider@insider.com (Geoff Weiss)
Title: A TikTok Ban Could Impact Apple and Tesla in China
Sourced From: www.businessinsider.com/tiktok-ban-may-hurt-apple-tesla-us-companies-2024-3
Published Date: Fri, 15 Mar 2024 17:50:30 +0000