Contrary to what both governments said in the media last month, the United States and China are heading into what could be an ugly and drawn out trade war. The White House has been the latest to issue threats, with President Trump saying that China could be hit with tariffs on up to $100 Million worth of exported goods.
Balanced and fair trade is essential for the strength of the worldwide economy, as well as for domestic interests, so it’s not exactly surprising that the United States is starting to address what many have perceived for years as unfair trade conditions.
Whatever your thoughts are, one area that you will be concerned about is the stock market. China and America’s largest companies are closely linked through not only trade, but also manufacturing contracts. These are the companies and stocks that will be most likely to suffer in an ongoing trade war.
Boeing (NYSE: BA)
China’s aviation industry is booming and Boeing makes a lot of money from exports to the nation. Up to 13% of Boeing’s revenue is generated from sales to Chinese companies. As one of America’s most important aviation companies, Boeing could be the target for Chinese tariffs in an ongoing trade war.
Caterpillar (NYSE: CAT)
Caterpillar produces heavy construction equipment which is used in China to support a booming population and healthy construction industry. More than 20% of Caterpillar’s sales come from the Asia-Pacific region (which includes China), and the company would be a likely target for tariffs from the Chinese government.
NVidia (NASDAQ: NVDA)
NVidia graphics processing units (GPUs) have huge market presence in China where they are used in consumer and professional markets, and also for cryptocurrency mining. Tariffs could raise the cost of NVidia hardware in both the Chinese and United States markets.
Intel (NASDAQ: INTC)
Like NVidia, Intel has a huge presence in China. As the largest and most important microprocessor company in the world, any disruption to trade between the two countries would be hugely detrimental to Intel’s business. Tariffs could affect laptops, desktop computers and other hardware coming out of China with Intel technology inside.
Qualcomm (NASDAQ: QCOM)
Qualcomm is another leading microprocessor manufacturer, with a focus on embedded chips that are used in mobile phones and small devices. Millions of consumer devices manufactured in China use Qualcomm chips, and tariffs could majorly impact the stock value of this company.
Apple (NASDAQ: AAPL)
The largest and most valuable publicly traded company in the world has strong links to China. Not only is China an essential manufacturing partner, but China is also one of Apple’s largest markets. 20% of total sales and more than $18 Billion of Apple’s yearly revenue come from China.
Trade war: Tension in the Market is High
There’s tension and uncertainty in the stock market. Anybody hoping for an end to recent volatility will be disappointed. Market index futures were up slightly at the close of trading on Thursday, but after hours’ numbers have dropped for many of the companies listed here.
This is a direct result of the threat of tariffs and the impact that they could have on American companies.
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