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A TikTok ban could be terrible news for Apple and Tesla

Apple CEO Tim Cook talks to an employee at a solar park in Hanstholm, Denmark.
TikTok drama in the US could end up hurting Apple.Christoph Dernbach/picture alliance via Getty Images
  • China's foreign ministry said banning TikTok would "eventually backfire on the US."

  • US tech firms operating in China are already facing a squeeze.

  • Analysts say China could retaliate by launching brand-damage campaigns or stifling local operations.

A TikTok ban in the US could spell trouble for Apple, Tesla, and other American companies operating in China.

The House of Representatives on Wednesday passed legislation that would require ByteDance to sell TikTok to a non-Chinese entity within 180 days or face a ban from US app stores.

It's unclear whether the Senate will pass the bill or whether the legislation could withstand possible legal challenges. Though several companies have expressed interest in buying TikTok, a spokesperson for the company suggested a sale wasn't likely, saying the bill had a "predetermined outcome: a total ban of TikTok in the United States."

Two analysts told Business Insider that if the US enacted a ban, China could retaliate.

US tech firms are already facing challenges in China amid strong local competition and an unfriendly political climate. On Wednesday, China's foreign ministry said attempts to ban TikTok would "eventually backfire on the US."

Gene Munster, a managing partner at Deepwater Asset Management, told Business Insider he believed a TikTok ban had a 25% chance of materializing. If it does, he said, "it would be bad for the China portion of US business revenue" for several companies, with Apple and Tesla "near the top of the list."

Munster said the Chinese government could retaliate by launching "propaganda brand-damage campaigns" — which is precisely what China thinks the US is doing with TikTok. He said it could also stifle operations by capping work hours, creating shipping strikes, or impeding permits for new projects.

Dan Ives, a managing director and senior equity analyst at Wedbush Securities, told BI that a ban could also add "agita to the tensions between US and China" in what he called a "cold tech war."

Munster said that while Apple and Tesla could lose the most in terms of total dollars, other American companies that derive a large percentage of their revenue from China, such as Wynn Resorts, Las Vegas Sands, Qualcomm, Texas Instruments, and IPG Photonics, might also be significantly affected.

A recent Financial Times report described Chinese consumers as increasingly buying with patriotism in mind. Other reports have said the Chinese government, citing security concerns, discouraged state employees from using iPhones and instead encouraged using devices from local purveyors such as Huawei.

With a TikTok ban in the US, Munster said, "Chinese leadership could expand its anti-iPhone campaign beyond the government." He added that it would be an "easy response" for the Chinese government to accuse Apple of spying, mirroring accusations in the US that TikTok is engaged in spying.

Munster said that while about 18% of Apple's overall business came from China, "that number could decline to 12% to 15% in a TikTok-inspired trade war."

Tesla is also feeling the pain in China, with shipments slumping as Chinese manufacturers like BYD — which became the best-selling EV maker in the world last year — dominate. But Munster said a ban might affect Tesla less than Apple.

In the past, China has suggested Teslas, too, pose security risks, reportedly restricting their use by military and government workers and barring the workers from parking Teslas at government offices.

"China was about 23% of Tesla revenue in 2023," Munster said, adding that if TikTok were banned in the US and China retaliated, that number could decline to 20%.

Apple and Tesla did not immediately respond to requests for comment from Business Insider.

Read the original article on Business Insider