In 2018, China sold almost 540 billion dollars worth of consumer products to the United States. The US meanwhile exported 120 billion dollars worth of goods to China. The result was the US reaching a record trade deficit of 420 billion dollars with China. The US president Donald trump think the US is the victim of unfair competition by China. Hence, he wants to put pressure on Beijing to negotiate a trade deal and lay out his conditions.
At the beginning of 2019, tensions between the two countries jumped to a notch. The US decides to raise tariffs on the imports of solar panels from China. Following a hike in tariff on other products like steel and aluminum. The list just escalates and almost half of the goods imported from China are hit with higher tariffs. After that, there seems to be no end.
Trade negotiations shift to Shanghai on Tuesday. Companies as diverse as Juniper Networks and O’Reilly Automotive are suffering the consequences of this trade war. The companies announced a hike in the prices of its products to make up for the cost.
The problem of Tariffs was mentioned in about one-third of the conference held by S&P 500 companies. The corporations are planning to mitigate the impact of the trade war.
The export-related companies have beaten the analyst’s expectations 77% of the time, while the domestic economy is still on 66%. Owing to these percentages, it feels like the trade war has a lesser impact on the export-oriented companies.
Astonishingly, Texas Instruments last week announced that the US-China trade tensions were not hampering its ability to conduct business in China.
The main effect of this trade war was seen when the US aimed at the Chinese telecom giant Huawei and effectively blacklisted it from doing any business with the US companies.