Chinese tech powerhouses like Tencent, JD.com, and Hon Hai are facing mounting global challenges as new U.S. tariffs threaten to derail their growth ambitions. While these companies are investing heavily in artificial intelligence to stay competitive, stricter trade conditions are making access to international markets increasingly difficult.

Since President Trump announced new tariffs in April, many of these firms now anticipate lower profits. Rising AI development costs may also lead to a slowdown in stock buybacks, which could dampen short-term investor sentiment.

Tariffs Hit Hard While AI Becomes a Top Priority

Even though U.S.–China relations have seen slight improvement, China’s top tech firms continue to feel the pressure of trade restrictions. Tariffs targeting semiconductors and key tech imports are driving up expenses and casting doubt on the future earnings of companies like Tencent, JD.com, and Hon Hai.

Hon Hai Precision Industry (Foxconn), the Taiwanese electronics giant known for its partnership with Nvidia and a key player in chip manufacturing, recently reported slowing revenue growth, citing the proposed 100% tariffs on Chinese chips. Still, the company is investing in U.S.-based data centers, signaling a long-term commitment to AI infrastructure.

In the near term, though, weak demand for consumer electronics such as smartphones and PCs is weighing heavily on its performance.

Tencent and JD.com: Growth Slows, AI Still in Early Stages

Tencent is expected to report just 7.3% year-over-year profit growth, the slowest in six quarters. While its advertising and gaming segments remain stable, AI initiatives are still in development and haven’t begun to generate revenue. The company still relies heavily on its traditional business model, which analysts say may be slowing down its overall transformation.

Tencent hopes that upcoming game releases like Valorant Mobile and Honor of Kings: World will boost user engagement and improve future earnings.

Meanwhile, JD.com posted a 15% increase in second-quarter revenue, driven by solid performance across retail, logistics, and emerging sectors. This suggests the company is adapting well to tough conditions, even though tariffs continue to undermine domestic confidence and international trade flows, ultimately slowing overall consumer spending in China.

Domestic Crackdown and the AI Arms Race

At home, Chinese authorities are cracking down on pricing wars in sectors like food delivery and digital services. Giants like JD.com, Alibaba, and Meituan are being told to stop "disorderly competition" — aggressive discounting, unsustainable promotions, and behaviors that hurt small businesses and destabilize the market.

These companies have pledged to ease such tactics and commit to fairer competition, which may hurt short-term revenue, but could strengthen the industry over the long run.

At the same time, they are increasing their investments in artificial intelligence. Analysts note that AI-related spending is starting to take priority over shareholder-focused moves like stock buybacks. While this shift might weaken near-term financial performance, it reflects a strategic bet on future innovation.

Forward, Despite the Risk

Despite the uncertainties, Chinese firms are pushing forward with transformation plans. Hon Hai recently sold its electric vehicle plant in Ohio for $375 million, redirecting focus toward data center technologies and AI infrastructure in North America.

JD.com is expanding its logistics capabilities and product offerings beyond traditional retail, while Tencent continues to leverage its strong gaming and ad revenues to fund long-term AI development.

#china , #TRUMP , #Tariffs , #AI , #Regulation

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