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How Uber Tried but Failed to Reverse Trump Tariffs

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Jun. 19 2019, Updated 6:08 p.m. ET

Uber sought to spare bike business from tariff burden

Uber Technologies (UBER) made a failed attempt to persuade American authorities to exempt it from the import tariffs targeting products entering the country from China, according to a Reuters report. Uber sought tariff relief on China-made electric bikes. In addition to its popular car-based ride-hailing service, Uber also operates a bike renting business. A number of companies that began as ride-hailing providers have diversified into the bike renting business as well. Some of these companies include Apple-backed Didi Chuxing and Tencent-backed (TCEHY) Meituan Diangping, both Chinese companies. Meituan bought Mobike for $2.7 billion last year to expand its bike renting business.

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American multinationals are concerned about Trump tariffs

American companies are concerned about the Trump administration’s tariffs, as they fear that tariffs will increase their costs and hurt their bottom line. Uber’s cost of revenue rose to $1.7 billion in the first quarter compared to $1.2 billion a year earlier. Uber exited the Chinese market and sold its operations in the country to its competitor Didi Chuxing. For some American companies with operations in China, Trump tariffs and the administration’s trade policies toward China threaten to strain their relationship with Chinese authorities.

According to media reports, Chinese authorities have recently summoned American chip suppliers including Qualcomm (QCOM) and Intel (INTC) to warn them against punishing Huawei. The Trump administration last month placed Huawei on a blacklist for being what it calls a risk to America’s national security, thereby barring American companies from certain business deals with Huawei. Facebook (FB) and Google (GOOGL) have responded to the trade restrictions by cutting Huawei’s access to some of their software products.

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