Chinese tech giants Tencent Holdings Ltd. and JD.com Inc. are more exposed to US tariffs than global peers, with sector earnings expectations weakening since President Trump’s April tariff announcements.

Despite easing US-China tensions, China is still facing higher tariffs relative to other countries.

Taiwan’s Hon Hai Precision Industry Co. (Foxconn), a major electronics manufacturer and Nvidia partner, is experiencing slower sales growth, partly due to concerns over new US chip tariffs.

Despite this, the company remains optimistic as it ramps up AI investments in the US.

Intense competition and government warnings to curb “disorderly competition” in the food delivery sector could weigh on JD.com’s growth.

Tencent’s upcoming earnings are expected to be underpinned by ad and video games, with no meaningful contributions from AI yet.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Tariff exposure creates deeper structural challenges beyond immediate earnings impact

The persistent tariff exposure mentioned for Tencent and JD.com reflects a broader structural challenge that has reshaped Chinese tech companies’ operating environment since 2018.

By September 2019, approximately 67% of U.S. imports from China were subject to increased tariffs ranging from 15% to 25%, with electronics sectors particularly affected 1.

These tariffs disrupted global supply chains and created lasting uncertainty that goes beyond quarterly earnings. The IMF estimated they could reduce global GDP by 0.5% by 2020, with firms delaying investment decisions due to unpredictable market conditions 2.

The Federal Reserve found that existing tariffs directly reduced Chinese GDP by 0.25%, with additional tariffs potentially causing another 0.39% decrease 3.

This means Chinese tech giants face ongoing structural headwinds that affect long-term strategic planning, not just short-term financial performance.

2️⃣ Government support signals strategic pivot toward tech sector self-reliance

The emphasis on AI guidance as a key sector driver reflects China’s strategic response to trade pressures through massive domestic investment.

China has allocated $138 billion through its National Venture Capital Guidance Fund specifically focused on boosting AI development and infrastructure 4.

This represents a significant policy shift, with a pivotal meeting between President Xi Jinping and tech entrepreneurs marking renewed government support for innovation after previous regulatory pressures 5.

The government’s approach demonstrates how geopolitical tensions have accelerated China’s push for technological self-reliance, particularly in AI where domestic capabilities can reduce dependence on foreign technology and markets.

This strategic pivot helps explain why AI guidance remains central to sector outlook despite ongoing tariff uncertainties.

Recent Tencent developments

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