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A surprise winner in Trump's trade war with China: Roku

  • Silicon Valley-based Roku is an unexpected trade war winner as TV sellers race to import Chinese-made "smart" TVs ahead of possible new U.S. tariffs on Chinese imports.
  • Many Chinese-made TVs come equipped with Roku -- as a result, the streaming tech maker has sprinted past Samsung and LG in the North American market for smart, or internet-enabled, TVs.
  • Buoyed by surging smart TV sales, Roku shares have soared 260% this year.

President Donald Trump's trade war with China is boosting Silicon Valley streaming technology provider Roku -- though not like the White House intended. The reason: U.S. electronics makers and retailers are racing to import Chinese-made "smart" TVs ahead of possible tariffs on those and other goods from China.

Roku's operating system is used in many of these TVs, and the rush has catapulted the company past powerful competitors such as Samsung's Tizen and LG's webOS. In the first quarter, Roku's share of the North American smart TV market surged to 37% -- that's up sharply from 23% in the last three months of 2018 and put the company on top for the first time since 2017, according to IHS Markit. 

"Fears of increased tariffs arising from the U.S.-China trade dispute spurred TCL and other TV brands reliant on Chinese manufacturing to increase shipments to North America in early 2019," said Paul Gray, research director at IHS Markit, in a note. "These companies hoped to build safety stocks and generate as much sales volume as possible before pricing was impacted by the tariffs."  

Companies, not countries, pay tariffs when the U.S. imports goods and services from other countries. But with sales humming, Roku shares have been on absolute tear -- they're up a whopping 260% this year on strong revenue growth.

Some of the best-known U.S. and Japanese TV brands are now made by Chinese companies. Sets by Japan's Sharp, for instance, are manufactured by China's Hisense for export to the U.S. market, according to Consumer Reports. Roku's system is found on TV brands including Element, Hisense, Hitachi, RCA, Sharp and TCL, according to its website.   

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The Trump administration last month suspended its threat to impose tariffs on $300 billion of Chinese imports, including popular consumer goods like TVs and mobile phones.The White House has already slapped tariffs on $250 billion in goods made in China.

It is unclear when -- and if -- the Trump administration and China might end their trade war. White House negotiators including U.S. Treasury Secretary Steven Mnuchin are scheduled to go to China next week to restart talks. 

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