Minutes after new US tariffs on Chinese goods took effect on February 4^th, China responded by announcing a wide range of measures targeting US businesses including Google, farm equipment makers and PVH Corp. (the owner of fashion brand Calvin Klein). On February 5^th, Bloomberg reported that China is preparing for a potential probe into Apple.

China's antitrust regulator, the State Administration for Market Regulation (SAMR), is carrying out the investigations into Google and potentially Apple. SAMR also initiated a probe into Nvidia before Trump's inauguration. All investigations involve an antitrust component, thus indicating some policy continuity. Therefore, similar probes could be initiated in the future independent of trade developments.

However, the timing of the announcements is noteworthy: although they came after a long Lunar New Year holiday, they arrived immediately after Trump’s announcement of tariff hikes on Chinese goods. So, the probe could be positioned as a bargaining chip in future trade negotiations with the Trump administration.

It is important to highlight that the latest probes are non-tariff measures (which are usually conducted by the Ministry of Finance and General Administration of Customs), so could be interpreted as a less inflammatory and retaliatory response to the US tariffs. This could buy some room for future negotiations.

The effect on Google will likely be mainly symbolic, as Google's search engine does not operate in China and the country accounts for 1% of its global revenues. However, Google works with Chinese advertisers, particularly for outbound ecommerce traffic, so the effect here will be more material. In a parallel development, the Trump administration revoked the de minimis privilege for all imports from China, which will result in a substantial hit to China-based cross-border ecommerce players like Temu and Shein. Thus, Google's (and by extension Amazon’s and Meta’s) advertising revenue from these platforms and other Chinese exporters will take a hit.

The effect on Apple could be more substantial, as the probe could affect Apple's ability to take a cut of in-app spending, third-party payment services and app store operations. This could be a headache for the company considering Apple's position in China has looked precarious in recent quarters, with sales in Greater China falling 11% YoY in the latest quarter, and smartphone shipments dropping 13% YoY in 2024, according to Counterpoint's Smartphone Weekly Sales data. Moreover, the 10% tariff on Chinese goods will include the vast amount of Chinese-assembled Apple products, which will impact Apple's retail prices and margins in the US.

Other regulators around the world will be closely monitoring China's probes into Google and potentially Apple. Both companies are no stranger to scrutiny by other regulators, over the exact issues under review by the Chinese regulators. Apple in particular has implemented a series of changes to comply with EU's Digital Markets Act. Further, the Financial Times reported on February 5^th that the EU is preparing to hit US Big Tech with retaliatory measures if Trump follows through on threats to impose tariffs on the bloc.

As expected, Trump’s reaction will be difficult to predict, considering the swift imposition and postponement of tariffs on Canadian and Mexican goods. In recent months, Trump has warmed up to Big Tech and has vouched to defend their interests against 'unfair' and 'discriminatory' treatment of US companies. On the other hand, the Chinese measures could be interpreted as an invitation to negotiation, offering a way out from an immediate tariff war. There is even a small chance that China could ask to include advanced semiconductors in a ‘Grand Bargain’ big purchase of US products. Trump could be in favor of this considering he does not see China as a major national security threat. However, this would still be difficult to pass politically in both the House and Senate.