President Donald Trump is continuing to pile the pressure on Chinese tech companies in the closing days of his administration.
Trump on Tuesday signed an executive order banning transactions with eight Chinese apps, including Ant Group’s Alipay. The order will also hit Tencent (TCTZF)’s QQ Wallet and WeChat Pay, as well as the apps CamScanner, SHAREit, VMate and WPS Office.
The “continuing activity” of China and the ruling Chinese Communist Party “to steal or otherwise obtain United States persons’ data makes clear that there is an intent to use bulk data collection to advance China’s economic and national security agenda,” the order reads in part.
It’s not at all clear how effective this order will be. It is set to take effect 45 days from now, well after Trump leaves office.
Prior orders that Trump has issued against Chinese tech firms have run into trouble. An order banning WeChat downloads in the United States was temporarily blocked by a federal judge, for example. Multiple courts have also issued temporary injunctions against the administration’s attempts to ban the short-form video app TikTok.
“The Trump administration is still rushing through its list of penalties to restrict the US-China relationship in hope of inducing China into retaliating, further worsening ties, and tying [President-elect Joe] Biden’s hands,” said Scott Kennedy, senior adviser at the Center for Strategic and International Studies in Washington.
He said that, while the restrictions on these apps are meant to be “highly disruptive,” it remains to be seen whether they will actually be implemented.
“The Biden administration will likely review this and every other measure Trump has enacted through executive action,” he said. However, he added that if the order does take effect, “it could hamstring US companies in China who sell their products and services over these platforms.”
“Expect plenty of industry pushback,” Kennedy added.
The Trump administration has been ratcheting up its pressure on Chinese firms in the weeks before Biden takes office.
Last month, Washington slapped harsh restrictions on chipmaker SMIC and other companies that effectively cut them off from US suppliers and technology. Trump also recently signed into law new rules that could force Chinese companies to delist from American stock exchanges if they failed to meet US auditing standards.
Tensions with the United States could also compound problems that companies like Alibaba are already dealing with at home.
Alibaba (BABA) is now facing a Chinese antitrust investigation, while its financial affiliate, Ant Group, has been ordered by regulators to overhaul major parts of its operations. Meanwhile, co-founder Jack Ma has disappeared from public view.