TikTok ban in the US causes trouble for Apple and Tesla

On March 13, the US House of Representatives passed a bill that would force ByteDance to divest TikTok within about six months or face a complete ban from US app stores. The ban received a high margin of support, with 352 votes in favor and 65 votes against.

China's Foreign Ministry said that banning TikTok would be counterproductive for the US. (Photo: Annie Gugliotta)

It's unclear whether the bill will pass the Senate, or face any legal challenges TikTok might bring.

If the bill passes, China could retaliate, analysts told Business Insider. US tech companies are facing increasing challenges in China amid fierce local competition. China's Foreign Ministry recently said that banning TikTok would ultimately backfire on the US.

Gene Munster, managing partner at Deepwater Asset Management, told Business Insider that he believes there is a 25% chance of a TikTok ban happening. But if it does happen, it would hurt the revenue from China for US companies, with Apple and Tesla "pretty much at the top of the list."

“ The Chinese government could retaliate by launching brand-damaging propaganda campaigns, which is exactly what China thinks is happening with TikTok right now, ” Munster said. “ Beijing could also disrupt business, by limiting working hours, creating transportation strikes, or blocking new project approvals for US companies operating in China, ” he added.

While Apple and Tesla may lose the most in terms of overall revenue, other US companies that saw significant declines in their revenue in China include Wynn Resorts, Las Vegas Sands, Qualcomm, Texas Instruments and IPG Photonics, Munster further noted.

A TikTok ban would add fuel to a dire situation. Chinese consumers are increasingly shopping with a patriotic spirit, while the government is moving to curb iPhone usage by state employees — citing security concerns — and instead encourage devices from local vendor Huawei.

In a world with a TikTok ban, “ Chinese leaders could extend their anti-iPhone campaign beyond the government ,” Munster said. “ This would be an easy response for the Chinese government. China accounts for about 18% of Apple’s revenue. It’s possible that that number could drop to 12% to 15% in a U.S. trade war against TikTok .”

Meanwhile, Tesla is also feeling the pain in China, Business Insider previously reported, with shipments falling as Chinese manufacturer BYD dominates — becoming the world's best-selling electric vehicle maker by the fourth quarter of 2023. But Munster said Tesla could be affected to a lesser extent than Apple in the event of a TikTok ban.

China has previously argued that Tesla vehicles also pose a security risk, reportedly restricting their use by military and government employees and banning them from parking at government offices. “ China accounts for about 23% of Tesla’s revenue in 2023,” Munster said. “If the TikTok law passes and China retaliates, I expect that number to drop to 20% .”

And Wedbush Securities CEO and senior analyst Dan Ives told Business Insider that the ban could also add “inflammation to tensions between the US and China” in what he calls the “tech cold war.”

HUYNH DUNG (Source: Businessinsider)

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