What happened: Google is preparing to move the production of smart thermostats and motherboards away from China to avoid the 25% import tariff on Chinese-made goods and to mitigate the risk of a volatile and often hostile government in Beijing, Bloomberg reported, citing anonymous sources familiar with the issue. The Silicon Valley company has already moved a significant portion of hardware production outside China. Motherboards are being migrated to Taiwan and smart thermostats to Taiwan and Malaysia, the anonymous sources said.
Why it’s important: The report shows the growing impact of the Trump administration’s tariffs on the Chinese economy, as US tech giants are caught in the crossfire and forced to explore alternatives to manufacturing in China. Yesterday, Foxconn, the largest assembler of iPhones in the world, declared it is ready to move iPhone production away from China. Google is reportedly trying to increase its foothold in China, allegedly developing a search engine that caters to Chinese censors and lobbying in Washington to continue supplying the Android OS to the blacklisted Huawei.