Macau Could Face Indirect Impact from Potential US-China Trade War

Macau, the world’s largest casino market, may experience collateral effects if tensions between the United States and China escalate into a trade war. Last week, President Trump urged the Committee on Foreign Investment in the United States (CFIUS) to impose investment restrictions on nations classified as “foreign adversaries,” a designation that includes China. Since Hong Kong and Macau are Chinese territories, they are also encompassed in this category, along with Cuba, North Korea, Russia, and Venezuela. Trump is pressing CFIUS to use its legal authority to curb Chinese investments in key U.S. sectors such as agriculture, real estate, and technology.

CFIUS has the legal foundation to impose such restrictions under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). This legislation expands and modernizes CFIUS’s powers, enabling it to assess and take action against potential national security threats posed by certain foreign investments in the U.S. “FIRRMA strengthens and modernizes CFIUS to address national security concerns more effectively, including by broadening the authorities of the President and CFIUS to review and to take action to address any national security concerns arising from certain non-controlling investments and real estate transactions involving foreign persons,” stated the Treasury Department.

In a memo titled “America First Investment Policy” sent to CFIUS officials last Friday, Trump emphasized his concern that China is using investments in the U.S. to enhance its intelligence and military capabilities, posing both economic and national security risks.

Although Macau itself does not invest directly in the United States, its inclusion on the foreign adversaries list stems from its status as a Chinese territory. However, three of Macau’s six casino operators—MGM China, Sands China, and Wynn Macau—are subsidiaries of U.S.-based companies. The remaining three—Galaxy Entertainment, Melco Resorts & Entertainment, and SJM Holdings—do not operate in the U.S., though Melco is publicly traded on Nasdaq.

It remains unclear whether Trump’s directive to CFIUS to restrict Chinese investment in the U.S. will have any consequences for the American parent companies of these Macau casino operators. The impact will likely depend on the extent of a U.S.-China trade war and how aggressively the U.S. enforces new investment limitations. There is precedent, however, for Trump’s past confrontations with China negatively affecting the stock prices of U.S.-based Macau operators. During his first term, shares of these companies declined sharply when Trump escalated trade tensions with China, a move that drew criticism from then-Las Vegas Sands Chairman and CEO Sheldon Adelson.

Despite Macau’s potential indirect exposure to the trade conflict, Trump is not directly targeting the region’s gaming industry. The casino sector does not contribute to the $295 billion trade deficit that the U.S. has with China. Instead, Trump’s focus is on preventing Chinese entities, including state-backed companies, from acquiring American farmland and gaining access to U.S. technological advancements in fields such as biotechnology and semiconductors. In the past, he has even threatened to impose tariffs as high as 60% on Chinese imports in an effort to curb Beijing’s economic influence.

By fLEXI tEAM