History of USA v China Trade war

Trade war: trade war is an economic conflict resulting from extreme protectionism in
which states raise or create tariffs or other trade barriers against each other in response to
trade barriers created by the other party.
can hurt other nations' economies and lead to rising political tensions between them.

Causes: large trade deficit of usa to china

Protectionism
Foreign Direct Investment unfair treatment
Currency manipulation of china ( devaluing their own currency to make their
products appealing to importers

Time line:
2011-: trumps campaign revolves around china being a currency manipulator
China purposely devalues its currency for their products to appear cheaper in the
market
Trump’s advisors accused china of unfair licensing practices which requires
Foreign direct investors to have joint venture with Chinese firms in exchange of
the Chinese market. The venture allows the Chinese to steel the investors IP and
use it for their own

February 7, 2018: The US implements ‘global safeguard tariffs’ – placing a 30

percent tariff on all solar panel imports, except for those from Canada, (worth
US$8.5 billion) and a 20 percent tariff on washing machine imports (worth
US$1.8 billion).

March 23, 2018: US imposes a 25 percent tariff on all steel imports (except from
Argentina, Australia, Brazil, and South Korea) and a 10 percent tariff on all
aluminum imports (except from Argentina and Australia).

April 2, 2018: China imposes tariffs (ranging 15-25 percent) on 128 products
(worth US$3 billion) including fruit, wine, seamless steel pipes, pork and recycled
aluminium in retaliation to the US’ steel and aluminium tariffs.

July 2018 US tariffs

25 percent tariffs on $50 billion worth of Chinese technology goods including
machinery, semiconductors, autos, aircraft parts and intermediate electronics components
imposed on July 6 and Aug. 23 as part of “Section 301” probe into China’s intellectual property
practices.
April 2, 2018. Ministry of Commerce of China responded by imposing tariffs on 128 products it
imports from America, including aluminium, airplanes, cars, pork, and soybeans (which have a 25%
tariff), as well as fruit, nuts, and steel piping (15%)

2019
president Trump raised tariffs on $200 billion tranche worth of Chinese goods from 10 percent
to 25 percent on Friday, and Monday morning China retaliated by raising its own tariffs on $60
billion of U.S. goods from 5 and 10 percent to four categories of 5, 10, 20 and 25 percent.

2019 fiinal tranche of tariffs targeting roughly $300bn in imports from China at a 25% rate.
Which is yet to be foreseen

China put a tariff on US soybeans and has turned to Brazil and Argentina for
alternative supplies.

Countries affected
Your business will be affected if use machines imported from China to manufacture
products which are then exported to China tariff on us plus tariff on china
Brazilian soya beans since China proposed a 25% tariff on imports of the produce from the US

Singapore (-) trade dependent country. annual economic growth slipped to the lowest in nearly
a decade trade restrictions on China's Huawei imposed by the U.S. government last week, are
expected to further hurt Singapore's electronics exports.

Taiwan (+) = Taiwan has been benefiting form the tradewar they manufacture hardware for dell
apple HP and Microsoft. Taiwan companies such as ASUS and ACER moved added plants (moved
back) in Taiwan although costs are high to be able to supply to the American brands
Although it is gaining for American consumption its exports still went down by 3.3% mainly
because china, which accounts for their total 28.8 of exports, has reported to have lowered its
demands from Taiwan

Malaysia (+) = Malaysian electrical and electronics (E&E) sector, as well as natural gas, were
among the biggest beneficiaries of the ongoing trade war between the world’s two largest
economic juggernauts.
production of integrated circuits (0.2% of GDP) as well as semiconductor devices and light-
emitting diodes (0.2% of GDP)
Malaysian companies in the semiconductor and chip-related industries are expected to see a
stronger demand for their products due to the trade diversion from China and the US.
Inari Amertron Bhd , Frontken Corp Bhd , Globetronics Technology Bhd , Malaysian Pacific
Industries Bhd, Elsoft Research Bhd and Vitrox Corp Bhd
increase not permanent

Vietnam(+)= economy boosted by 8%, mostly from electronic apparatus for telephones,
furniture and automatic data process machines,
sales to the U.S., EU and other developed markets, and not to China, that have propelled
Vietnam's growth over the past decade.
Vietnam’s wood industry could achieve higher growth if local businesses can grab the
opportunity that may open up when the U.S. shifts purchase from China to Vietnam, according
to experts.
the new China, low wages and lax labor and environmental regulations, and it could be poised
to expand its exports of manufactured goods to the U.S. market.
U.S. imports from Vietnam have already risen 34 percent in 2019.

America = In terms of the value of goods, the US has been able to find more alternative sources
for its imports than China. Around two-thirds of Chinese products hit by US tariffs by volume, or
86 per cent by value, were able to be substituted by goods from other countries.
US import substitution in mostly electronic products, followed by furniture and travel goods.
All American business who’s majority of its sales comes from US will see a growth in there
stocks

China= China was able to find alternative sources for 41 per cent of goods tariffed by the US by
volume, or 68 per cent in value terms.
China import substitution mostly in soybeans, aircraft, grains and cotton,

Canada (-) = 10 per cent drop in Canadian exports would reduce Canada's GDP by 210 basis
points. Lower economy due to commodity prices.
solid job gains, stabilization of the housing market, the removal of U.S. steel and aluminum
tariffs and a weaker Canadian dollar are all reasons to be optimistic about economic growth.
Dependable on the US economy so if us economy goes down so is CANADA’s

Brazil& argentina (+) china has turned to brazil for soybeans

South American soybean farmers are expected to pick up the slack from falling U.S. soybean
exports to China, which has historically been the top destination for U.S. soy. Brazil saw strong
demand for its soybeans as China shifted its purchases to other suppliers. But the outlook for
South American exporters has been clouded by other factors, such as Chinese goodwill
purchases of U.S. soybeans in early 2019 and an outbreak of African swine fever in China, which
has weakened demand for soy pig feed.
Philippines
Philippine manufacturing could see a boost of 0.2-0.7%, primarily in electronics…
[assuming] the Philippine economy is able to attract more trade from tariff-affected economies,”
minimal effects the net effect of the trade war will have been to knock only 0.1­0.2 
percentage point from GDP growth,

Industries affected
Automobile industry (-) = biggest affected especially US automotive (increased tariffs
from15 to 40 percent) China announced 25 percent tariffs on $16 billion in U.S.-made goods.
That included the roughly $10 billion in automobiles that Chinese motorists were expected to
purchase this year.

Tech(-) = top-performing sector on Wall Street for most of 2019

America’s Commerce Department said that companies would need a special licence to deal with
Huawei, China’s hardware giant, which it deemed a threat to American interests (it later said the
order would not take full effect for 90 days).
led the S&P 500 lower today as Alphabet Inc. (GOOGL) – the parent company of
Google – and Qualcomm Incorporated (QCOM) have moved to cut off Huawei's
access to their technology.

If these technology companies can't demonstrate that they are going to continue
producing strong growth, traders aren't going to continue to pay premium prices
for their stocks.
a tech trade group representing Silicon Valley heavyweights like Amazon,
Facebook, Google, Microsoft and Twitter — told Politico the tariffs will “limit
internet companies’ access to critical components, and hit at the heart of how the
sector creates jobs and contributes to a $172 billion digital trade surplus.”
S&P technology sector losing more than 3.3%

Telecom = specific tariff increase will affect every day telecommunications

equipment like modems and routers that help Americans connect to the internet
and with each other. Increased tariffs on hardware components also mean that
companies large and small will find it more difficult to use digital and cost-saving
solutions in their daily business.”

Small telecom companies from rural areas will be affected however big
companies like at&t will just have a small dent on their profits since their buying
out small companies that are affected by the trade war

Agriculture = US soy bean has been imposed with 10% tariffs therefore Chinese went
into brazil and argentina for soy beans

Materials industry =

Services industry (+) = the services sector, software companies, media and entertainment
names, and retailers and banks, could be solid investment bet
]

Stocks Affected

bmw stocks
The automaker recently authorized a $1
billion expansion for its plant in
Spartanburg, South Carolina, its largest
manufacturing complex in the world. The
move was intended to create about 1,100
new jobs with the addition of the all-new
X7 model, BMW’s largest and most
expensive SUV yet. However due to the
impending trade war bmws sales are
expected to drop especially to china no
facility currently capable of taking on
production of its X models in the short-
term
ford Mercedes benz
U.S.-based manufacturers, General Motors, Ford, Fiat
Chrysler and Tesla

Alibaba (+) =
With the majority of its customer
base domestically located,
Alibaba is facing strong growth
potential not only with online
retail but also with its cloud-
computing business, and in the
more traditional brick-and-
mortar retail space as well.

Trade war impact will be

minimal, as the majority of the
company’s sales
and earnings are recognized
within China.

Over the past three years the

company has been grabbing up stakes in grocers and electronics chains,
including electronics retailer Suning, Intime Retail and Sun Art, one of China’s
largest grocery chains.
The company recently doubled its investment in Southeast Asia, investing
another $2 billion in its Singapore-based e-commerce subsidiary Lazada Group,

Apple (-) =down by 8% lost majority of its market since Chinese govt is boycotting their products
Apple’s stock, meanwhile, fell more than twice as much, stripping about $50 billion out of its
market cap. As of the close of the market Monday, Apple’s stock had fallen 13.7% since the
beginning of May.

(KEYS), Western Digital Corporation (WDC) and Activision Blizzard, Inc. (ATVI) –
which were down 8.92%, 6% and 5.99%, respectively.
CVS health corp (+)

Qualcomm (-)
Qualcomm shares fell 10.9% —
their biggest one-day drop since
Jan. 23, 2017 — after a U.S.
judge ruled the chipmaker
violated antitrust law by
unlawfully suppressing
competition in the cellphone
chip space. The news dragged
down the VanEck Vectors
Semiconductor ETF (SMH) down
by 1.9%.

Shares of Qualcomm have been under pressure all month, falling 19.5% through Wednesday’s
close.
company relies heavily on the Chinese market to monetize these technologies. But it had
problems collecting royalties, following several challenges by Chinese regulatory authorities.

Qualcomm ftc lawsuit revenues plummeted

Nucor steel

Amazon amzn) earnings

Sales force (crm)e

Medtronic (mdt)

Visa (v) earnings e

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