Has Silicon Valley mistaken on Donald Trump? Several shattering statements of the latter were from honey to his ears. His desire to deregulate AI. His desire to prevent Europeans from framing the competitive and information – very real – risks – which giant platforms pose. The reality is less glamorous. If the election has boosted American technological values, especially those called “7 magnificent” (Nvidia, Tesla and the five GAFAM), the state of grace is already over.
Since mid-February, the Nasdaq 100 has dropped by 12 %. The courses of the Microsoft giant and the Nvidia flea manufacturer are lower than they were before the election of Donald Trump. Amazon, Alphabet and Tesla have found their level prior to the election. Elon Musk’s company is going through a particularly difficult period: Tesla’s annual registrations in Europe have lowered in half and its valuation has been divided by two since the start of the year.
Certainly, Donald Trump is not solely responsible for this drop. The spectrum of a global economic slowdown hovers over the markets. And the stock market capitalizations of digital giants had reached excessive levels. But American tech also suffers from Donald Trump’s economic policy and his immoderate love for customs barriers.
“Trump has a primitive vision of the economy”
“American technological companies depend strongly on Asia, in particular for components. This policy increases their production costs and threatens their beneficiary margins,” analyzes Andrea Tueni, responsible for market activities for Saxo Bank. And if the sector affects its customers, it is its sales that risk melting.
“Trump has a very primitive vision of the economy. He does not understand what economic integration means, analyzed David Frum, the star editorial writer of the magazine The Atlantic in a long interview with L’Express. He imagines that the economy works as follows: we impose a customs tax on the toaster, we block foreign toas, and this immediately restarts the American toast-toy industry […] In reality, this systematically weakens the economy by making it less competitive, as if we added a layer of fat to each muscle fiber, which slows down the whole system and increases costs for everyone. “
The fact that certain measures are canceled just after being announced also gives a feeling of uncompromising amateurism. The cases of Mexico and Canada are eloquent in this regard. On March 4, the Trump administration imposed customs duties on all exports from these countries to the United States. But from the next day, she offered a stay of a month to the automotive sector. Before the day after expanding this reproduction again to most sectors. Understand who can. The markets do not taste these pirouettes hardly.
Of course, American digital giants have solid kidneys. It is however ironic to see them heckled when their Chinese counterparts flourish. The “seven titans” of the Middle Empire – Alibaba, JD.com, Byd, Xiaomi, Tencent, Netease, Smic – have climbed more than 40 % since the start of the year. And they attract more and more outside their juicy domestic market. The Xiaomi smartphone manufacturer, to name a few, still earns market share in India. Europeans who understand the danger of their high dependence on American tech may well be tempted to look in the East to diversify their suppliers. In which case, Donald Trump would have managed to push one of his best customers – 450 million consumers with a comfortable purchasing power – to his main enemy.