China Trade Stocks Hammered on Trade Talk Woes

The stock market indexes were taking it on the chin on Monday after President Donald Trump tweeted that new tariffs will go into effect shortly if trade talks with China do not result in a deal. The indications were that China was basically trying to renegotiate or backpedal away from the terms.

24/7 Wall St. has looked at several of the key “China beneficiaries” if trade talks result in a favorable trade deal. Most are U.S.-based, but not all. If a trade deal falls apart, these are all likely to feel more pain ahead.

It is important to understand that even on Friday the outcome of the negotiations over the past few months was expected to result in a deal. The issue hanging things up had seemed to continue to be around China’s recognition and treatment of intellectual property of companies doing business in China or being knocked-off by Chinese competition with lower-cost or identical goods.

Monday’s reaction had Nasdaq futures down almost 2%, and the Dow Jones industrials were indicated to open down 1.8% and the S&P 500 to open down 1.6%. Things were worse in China, with the Hang Seng (Hong Kong) down 2.9% and the SSE Composite (Shanghai) down a sharper 5.58%. The two tweets from @realDonaldTrump on Sunday said:

For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….

….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne

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