WASHINGTON, HONG KONG - It turns out that Macau is a handy chip for China in its trade standoff with Donald Trump. The gambling hub’s 20-year licenses for Sands China, Wynn Macau and others are nearing their expiration. It gives Beijing leverage over founders Sheldon Adelson and Steve Wynn, both friends of the U.S. president.

Macau casinos have already been hurt by the escalating tariff tit-for-tat. In the first two weeks of September, shares of the six licensed operators lost almost a quarter of their value on the Hong Kong exchange, while the benchmark declined only slightly. The United States announced it was finalizing tariffs on another $200 billion in Chinese goods on Sept. 18.

Adelson’s Sands China and Wynn Macau are waiting for the Chinese enclave, a big source of income for their parent companies, to provide more details about the license renewal process. The Macau businesses contributed more than 60 percent of Las Vegas Sands’ total $3.3 billion revenue in the second quarter and about 34 percent of Wynn Resorts’ $1.6 billion revenue.

Their concessions expire in 2022 while others end in 2020. As a special administrative region, Macau is supposed to have autonomy but Beijing could interfere with the license process or by restricting the flow of tourists from the mainland.

Wynn sold his stake in Wynn Resorts earlier this year after being forced out of management. But he may still care about the success of his namesake firm. Trump chose Wynn as finance chair of the Republican National Committee in 2017; he stepped down a year later. Wynn gave $500,000 to the America First Action super political action committee.

Adelson and his wife, meanwhile, contributed $20 million to a pro-Trump Super PAC. In exchange, Adelson has had success in pushing his agenda. He encouraged Trump to move the U.S. embassy in Israel from Tel Aviv to Jerusalem, which occurred in May. Last year, Trump brought up Adelson’s Japanese casino bid with Prime Minister Shinzo Abe, according to ProPublica.

Wall Street has to some extent relied upon Blackstone’s Steve Schwarzman to be the Trump whisperer, defusing the president’s antagonism toward China. Perhaps fellow hotel and casino moguls will have better luck. Squeezing Adelson, in particular, could be one way for Beijing to get Trump’s attention on trade.

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CONTEXT NEWS

- Casino concessions in Macau are due to expire in 2022 for Sands China and Wynn Macau, while MGM China’s license ends in 2020. Macau’s licenses were first awarded in the early 2000s. Government officials have said there may be a new public bidding process when they expire.

- The former Portuguese colony is run by China as a special administrative region, which is supposed to give it political and economic autonomy. China is responsible for Macau’s diplomatic relations and defense.

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(Editing by Richard Beales and Sharon Lam)

© Reuters News 2018