A look at earlier trade troubles

Steel, automobiles, chicken, and pasta: U.S. trade wars in one chart - MarketWatch

Rising trade tensions between the United States and the rest of the world could cost the global economy $430bn (£324bn), with America “especially vulnerable” to an escalating tariff war, the International Monetary Fund has warned. Delivering a sharp rebuke for Donald Trump, the Washington-based organisation said the current threats made by the US and its trading partners risked lowering global growth by as much as 0.5% by 2020, or about $430bn in lost GDP worldwide..

IMF warns Trump trade war could cost global economy $430bn | Business | The Guardian

Senseless trade war on cars:

The Commerce Department has now opened a Section 232 action, allegedly to determine if vehicles imported by the US represent a national-security threat ("Beware of Germans bearing BMWs!"), but actually to stoke drama and to put Detroit in the awkward position of having to build more factories or at least hire more US workers. Or more accurately, get them to say that they'll do these things so that Trump can get votes in the battleground Midwestern states where the big three are concentrated. As a whole, the auto industry has blasted the move, insisting correctly that it will be bad for business and bad for consumers. The UAW, sensing that Detroit may end up throwing money at the problem by doing some marginal hiring, has made positive statements about the probe.

The problem is that although some foreign brands, China-owned Volvo most recently, have followed the "transplant" script and constructed a US plant, few others want to do this because the American auto market has been at peak sales levels for three years in a row. Investing in new US manufacturing capacity would be throwing money into an impending sales downturn.

The autos aspect of the trade war fits into Trump's raw-deal theatrics because a voter who doesn't know anything about the car business or the European Union or Japanese or Chinese markets might believe that hefty tariffs on imported vehicles might somehow lead to better US access to new customers. The EU could, for example, drop its 10% tariff on US-made cars. America wins! Except that US automakers have been struggling with a challenging European market for over a decade; GM just sold off its Opel division to Peugeot after years of losses. The vehicle mix in Europe — small cars and diesels — is also completely different from what Detroit builds in the US. Production in the US is also moving away from passenger cars to pickups and SUVs. The cars that Europeans favor tend to have narrow or nonexistent profit margins.

Why Trump will win auto tariff trade war - Business Insider

Just looking at the goods and services trade deficit is misleading and doesn’t capture the true size of U.S. business interests, according to Deutsche Bank economists. While trade and corporate data aren’t usually combined, if you add up all trade data, sales by U.S. companies in foreign countries and foreign firms in the U.S., "U.S. companies have sold more to the rest of the world than other countries have sold to the U.S. in the past ten years," writes chief China economist Zhang Zhiwei in the report.

The $1.4 Trillion U.S. ‘Surplus’ That Trump’s Not Talking About - Bloomberg

Yet the more that the US falls out with its major trading partners, the more likely investors and analysts think the dollar will strengthen.

Trade tension fails to dim prospects of a stronger US dollar | Financial Times

But almost none of the Trump tariffs are on consumer goods. Chad Bown and colleagues have a remarkable chart showing the distribution of the Trump China tariffs: an amazing 95 percent are either on intermediate goods or on capital goods like machinery that are also used in domestic production

Opinion | How to Lose a Trade War - The New York Times

There are two ways trade disputes could hurt the earnings of S&P 500 companies, according to David Kostin, Goldman's chief US equity strategist. The first is by undercutting the revenue of companies that export to China, mainly, and other countries with which the US is fighting. "The tariff impact on S&P 500 EPS through lower revenues is minimal," Kostin said in a note to clients on Friday. This is because just 2% of aggregate S&P 500 sales come from China, he added. Even if the trade war went global, with 5% tariffs on all trading partners, Goldman sees its 2019 S&P 500 earnings-per-share forecast lower by just 1%, to $169. The second, more meaningful impact to US companies is via lower margins, Kostin said. The flow of trade between the US and China is much heavier in the China-to-US direction, and roughly 15% of the cost of goods sold has origins outside the US. "If tensions spread and a 10% tariff were implemented on all US imports (highest rate since 1940s) our EPS estimate would fall by 15% to $145," Kostin said.

GOLDMAN: How Trump's trade war affects stocks and what to invest in - Business Insider

After reporting second-quarter earnings, both GM and FCA stock took losses in the markets. The CFOs of both automakers addressed higher steel costs due to Trump's tariffs. GM and FCA cut full-year profit guidance. Outgoing General Motors CFO Chuck Stevens has been with company for four decades, but I'm not sure he's ever used the word "headwinds" as often as he did on a conference call following the carmaker's second-quarter earnings on Wednesday.

Trump tariffs become headache for auto industry - Business Insider

Coca-Cola Company on Wednesday said they will raise the price of their signature sodas this year in part because of the financial strain caused by President Trump's tariffs.  Coca-Cola's Chief Executive James Quincey told the Wall Street Journal that they are stepping up prices in response to the rising costs of delivery and metal prices after the U.S. slapped $50 billion duties on Chinese products earlier this year.

Coca-Cola says it's raising soda prices after Trump tariffs | TheHill

Qualcomm (NASDAQ:QCOM) CEO Steve Mollenkopf tells CNBC the NXP deal “got caught up in a trade war.” Mollenkopf continues: “That being said, we thought it was important to bring certainty to the process, move on and really focus on the things that we said are going to drive value.”  He doesn’t think the trade war is a risk to Qualcomm’s overall business in China.

Qualcomm CEO blames trade war for NXP deal failure - Qualcomm Inc. (NASDAQ:QCOM) | Seeking Alpha

Element Electronics, a consumer electronics company in South Carolina, says it will be closing its plant in Winnsboro due to tariffs imposed by President Trump. The State reported Tuesday that the company was one of the largest remaining employers in Fairfield County after the local Walmart, which used to be the largest grocery store in the county, closed its doors two years ago. The news also comes after plans were canceled to build two nuclear reactors in the area, terminating 5,000 construction jobs. “When you think you’ve reached rock bottom, to get kicked in the gut like this, you didn’t think anything more could happen,” state Sen. Mike Fanning (D) said of Element's announcement to the local paper. “Within 365 days, you just get rocked to your core.”

South Carolina manufacturer says it's closing plant over Trump tariffs | TheHill

Apple has benefited from cheap labor and strong supply chain in China which has helped it boost profit and get to a $1 trillion valuation, the state-backed People's Daily said. The U.S. firm should share that money with Chinese citizens, the article urged. Apple could be the target of "anger and nationalist sentiment" amid the ongoing trade war.

Apple could be used as a 'bargaining chip' in China-US trade war

Apple is highly exposed to a trade war between the US and China. It makes many of its products for the US market in China, and it also sells gadgets including the iPhone in China, making them a potential target for Chinese retaliation against the Trump tariffs. Trump threatens new tariffs on $267bn of Chinese goods Read more The technology sector is among the biggest potential losers as tariffs would make imported computer parts more expensive. “The burden of the proposed tariffs will fall much more heavily on the United States than on China,” Apple said in its letter.

Donald Trump: Apple should make products in the US to avoid tariffs | US news | The Guardian

Beyond America's ongoing trade fight with China, Trump also suggested to a Wall Street Journal columnist on Thursday that Japan could be next in his sights. "The president likes to pick trade fights," Scissors said. According to Roach, however, tariffs are unlikely to be the solution to the trade deficits between the U.S. and its trading partners. "The tariff war is really a foil," Roach told CNBC, saying that the U.S. had bilateral deficits with 102 countries around the world. Instead, he called it a "multilateral problem" that's due in a large part to Americans not saving. "When you don't save and you want to grow, you import surplus savings from abroad, you run massive current account and trade deficits to attract the capital," Roach said, claiming that was something that "any basic macroeconomics class will teach its students." "Apparently the president or his advisors, several of them unfortunately went to Yale, don't either remember or didn't do well in their macroeconomics classes," Roach added, further suggesting that Trump and his aides should "go back ... and study their notes."

US-China trade could remain tense for two more years: Economist

On Thursday morning, a coalition of more than 150 trade groups wrote a letter to Washington’s top trade official, reiterating staunch opposition to the escalation, which, they stressed, would undermine the competitiveness of US companies. Paradoxically, the hastily crafted policy will also strengthen Chinese firms’ global edge, the letter argues. “US companies capture the highest value of most global value chains, so a reduction in trade due to these tariffs will disproportionately harm US companies with less impact on their Chinese suppliers who assemble, finish, or package these products,” said the statement from the multi-industry association, which represented companies from virtually every sector of the economy. “Once these tariffs go into effect, taking them down may not happen any time soon, as both sides harden their positions. Without any timeline for when these tariffs will be removed, the added costs and negative effects on American businesses, farms, and citizens will only compound over time,” the letter added.

US firms warn next trade salvo will give China upper hand | Asia Times

Underlining the disproportionately negative impact the Trump administration’s policy will have on US companies, a report released on Thursday by the American Chemistry Council detailed how tariffs will accelerate Asian economic integration, to the detriment of US firms. China has recently committed to eliminating or reducing trade barriers on more than 8,500 goods imported from trading partners in the Asia-Pacific region, the report noted, which will significantly reduce costs of inter-Asia-Pacific business.

US firms warn next trade salvo will give China upper hand | Asia Times

“Cellphones alone account for US$70 billion of Chinese exports to the US. Consumer electronics along with telecom equipment comprise nearly US$200 billion,” Asia Times wrote in May, adding: “Toys earned China another $28 billion. Slap on tariffs, and the must-have Christmas toy will cost 25% more, not to mention computers, flat panels and so forth. In terms of GDP, the impact will be slight, but a generation of Americans has come to regard cheap electronics as a birthright.” On the flip side, in China, the costs will largely be absorbed by corporations, not passed on to consumers, as Hong Kong-based economist Larry Hu noted to Bloomberg on Wednesday.

Looming tariffs will hit US pocketbooks, not Chinese | Asia Times

The growing U.S.-China trade war may well push the world's second-largest economy to work toward winning even more global clout, according to an economist at a widely followed investment group. In fact, Eric Fishwick, head of economic research at CLSA, said the ongoing trade tussle between Washington and Beijing could actually push China to shore up both its economy and its geopolitical positioning. "It may well have the perverse reaction of accelerating China's attempts to move up the supply curve ... to become self-sufficient (in) more and more high-tech products. And it will certainly encourage China in its moves to build more and more political and economic spheres of influence," he told CNBC's Akiko Fujita at the 2018 CLSA Investors' Forum in Hong Kong.

Trump trade war on China may have perverse reaction: CLSA economist

The Trump administration is expected to enact tariffs on an additional $200 billion worth of Chinese imports to the US. Some companies say they will have to immediately lay off employees to absorb the cost. Others warn they may have to shut down completely.

'If this tariff takes effect, we are out of business': Small companies warn of widespread layoffs and shutdowns if Trump doesn’t back down from a trade war with China