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Illustration: Lazaro Gamio/Axios

Even as businesses continue to protest the growing U.S.-China trade war, the tariffs are already causing companies in both countries to rethink how and where they do business.

Why it matters: For all their differences, the U.S. and Chinese tech industries remain very interdependent — each country contributes a great deal of business to the other's economy.

Where it stands: What tech companies want most is an end to hostilities, as evidenced by a letter issued Wednesday by more than 150 business groups calling for an end to the tariffs. However, the ongoing trade war has both sides eyeing how to lessen their dependence on the other.

  • Historically nearly all smartphones and most other consumer electronics have been made in China, but that is starting to shift. Google, for example, is joining the electronics makers looking at Vietnam as an alternative.
  • China is also likely to explore ways to reduce its dependence on U.S. technology for everything from software to chips and the tools to make them.

Yes, but: In the short term, there is a lot of pain for companies in both countries.

  • Apple remains highly dependent on China for manufacturing and it is also a key market for iPhone sales. Nearly all iPhones are made there, with the exception of phones sold in Brazil and India, where laws impose huge tariffs on imported electronics.
  • Huawei, subject to a near-total ban on business with the U.S., finds itself not only shut out of a key market, but scrambling to find new options for chips and operating systems, among other components. The company faces the prospect of launching its first high-end smartphone without Google's apps and services.
  • Meanwhile, more than 130 companies have asked the Commerce Department for permission to continue selling components to Huawei, Reuters reported this week.

Between the lines: Trump has repeatedly argued that Apple and other tech companies should return manufacturing to the U.S. But that's considered wildly unrealistic, a point that Tim Cook has no doubt tried to make during his meetings with President Trump.

  • U.S. unemployment rates are already at record lows, the Trump administration's immigration policies actively discourage expanding the domestic labor force, and efforts (like Foxconn's deal with Wisconsin) to get overseas manufacturers to build new U.S. factories have been overhyped.
  • More importantly, the U.S. just doesn't have the type of workforce concentration that would allow for devices to be made at the kind of scale Apple and others need for smartphones. At most, tariffs will cause manufacturers to move production from China to other countries.

The bottom line: The tech industry's global supply chain took years to assemble, and it will not dissolve overnight. But even if the Trump administration's most bellicose trade-war scenarios don't materialize, the tariff fight has added a deep layer of uncertainty to how companies operate globally.

  • Wide-open world trade was the rock-solid foundation for decades of tech expansion. With that condition no longer a given, more defensive behavior and slower growth are likely.

Go deeper: China tariffs will hit fall shoppers despite Trump's postponement

Go deeper

Updated 55 mins ago - Politics & Policy

Pelosi appoints GOP Rep. Kinzinger to Jan. 6 committee

House Speaker Nancy Pelosi (D-Calif.) announced Sunday that she has appointed Rep. Adam Kinzinger (R-Ill.) to serve on the House select committee investigating the Jan 6. Capitol riot.

Why it matters: Pelosi's announcement comes after she rejected two of the five Republican appointments offered by House Minority Leader Kevin McCarthy (R-Calif.).

USCP chief: Officers testifying before Jan. 6 committee "need to be heard"

Thomas Manger, the new chief of the U.S. Capitol Police, Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

New Capitol Police chief Tom Manger said officers testifying before the Jan. 6 select committee this week "need to be heard."

Driving the news: The select committee's first hearing is set to take place on Tuesday and will feature testimony from law enforcement officers who were subject to some of the worst of violence during the insurrection.

Mike Allen, author of AM
3 hours ago - Politics & Policy

America's "Friendscape" crisis

New research shows Americans have fewer friends than in the past, and are less likely to have a best friend.

  • Why it matters: At a time of excruciating mental and societal stress, this is another sign we're breaking apart. And the friendship drought could get worse with more people working remotely or hybrid-ly.