How Trump-China Trade Spat Is Rippling Through Corporate America

(Bloomberg) -- Washington’s action against Chinese imports Friday, and the response from Beijing, are hurting some U.S. industries more than others. Here’s a round-up of Bloomberg’s coverage of how the dispute is playing out in corporate America.

Renewables

President Donald Trump’s tariffs on $50 billion in Chinese imports include duties on components for wind turbines, nuclear reactors and batteries -- but they are unlikely to cripple any of those industries.

Less than 2 percent of wind turbines installed in the U.S. since 2010 were imported from China, Stephen Munro, an analyst at Bloomberg New Energy Finance, said in an email Friday.
“It may prove to be a glancing blow as there are non-Chinese alternatives available,” he said.

The list of targeted products includes components used in most lithium-ion batteries, Ravi Manghani, an analyst at GTM Research, said in an email. But China supplies the U.S. with just 3 percent of those products, he said. Plus, he added, American manufacturers have multiple alternatives from Japan and South Korea.

When it comes to nukes, there are only two reactors under construction in the U.S., and it’s unlikely ground will be broken on any more large ones in the next decade, Chris Gadomski, a Bloomberg New Energy Finance analyst, said in an email. “Any new reactors that may be built would be U.S. developed advanced reactors absent Chinese components,” Gadomski said in an email.

Click here for more on the tariffs’ effect on the energy industry.

Apparel

The clothing and footwear industry was largely spared by Trump administration tariffs on Chinese goods, but a looming trade war could still do damage to an apparel sector that’s more global than ever.

The actual shirts and shoes imported from China won’t get new tariffs, according to the full list of 1,102 product lines released Friday. Only some of the equipment used to make them, like textile rolling-machine parts and injection molders for shoes, were included in the final list. A host of other Chinese machinery used by American apparel companies that had been on a preliminary tariff list -- like textile printing equipment, sewing machines and looms -- made it through unscathed.

Click here for more on the apparel industry’s reprieve.

Agriculture

Soybean futures fell to the lowest in 10 months in anticipation of retaliation from China. Prices for November delivery dropped 0.7 percent to $9.4375 a bushel on the Chicago Board of Trade after touching $9.2725, the lowest for the most active contract since August 17, 2017. This week, the oilseed tumbled 5.8 percent, poised for a record decline.

Duties against U.S. shipments may mean that China imports more from South America at a premium, Rabobank said in a report. Prices in Brazil, the world’s top exporter, are rising after a national trucker strike stalled freight and a drought in Argentina cut global global supplies.

Cotton for December delivery tumbled as much as 3.7 percent to 89.52 cents per pound on ICE Futures U.S. in New York. “Fears that U.S. cotton may be involved in the China retaliatory response helped to drive the market sharply lower,” David Hightower, founder of Chicago-based Hightower Report, said in a note.

Click here for more about agricultural commodities markets in the wake of the tariff news.

Metals/Mining

Metals & mining was the worst-performing sector on the S&P 500 Index.

While iconic U.S. metal stocks Alcoa Corp. and U.S. Steel Corp. had previously benefited from the Trump administration’s initial crackdown on cheap imports, the shares were trading down Friday.

It’s part of a mining and metal selloff fueled by concern that Trump’s announcement will end up curtailing demand in the world’s biggest consumer of raw materials. Shares in Alcoa fell as much as 5.7 percent Friday, while U.S. Steel lost 6.3 percent.

A fall in other metals, from aluminum to zinc, spurred declines for Teck Resources Ltd., Freeport-McMoRan Inc. and other miners. China is the biggest consumer of industrial metals.

The tariffs mean China “won’t be importing as much of the base metals,” said Peter Thomas, a senior vice president at Chicago-based metals broker Zaner Group. “As these tariffs take effect, we’ll see less consumption from each side until it gets settled. It started with base metals and it’s pulling on gold.”

See a full story here on the reaction from metal stocks.

©2018 Bloomberg L.P.

With assistance from Editorial Board

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