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China pulls a reverse Uno card

Coal, natural gas, rare minerals and more are all in the spotlight today.

A stack of cargo containers

Anna Kim

3 min read

The US may have been able to work out a temporary deal with our allies to the north and south of the border, but sweeping 10% tariffs on China officially went into effect today.

In retaliation, the Chinese government vowed to roll out its own 15% levy on coal and natural gas imports from the US, and an additional 10% tax on a variety of US goods and commodities, including crude oil, agricultural machinery and some cars. All of these duties will be implemented starting Monday.

China’s Commerce Ministry also put an export control measure in place for key minerals necessary for building tech like semiconductors and missile systems.

And that wasn’t all: China opened up an antitrust probe into Google parent Alphabet. It also added PVH, the luxury conglomerate that owns brands such as Tommy Hilfiger and Calvin Klein, plus biotech firm Illumina to its unreliable entity list—which sounds like a list of two-timing ex-boyfriends, but actually could result in the firms being banned from operating with China. PVH and Illumina fell 1.03% and 5.26% today, respectively.

Permanent policy, or a negotiating tactic?

Crude oil sank on the news, given that the tariffs directly impact oil exports, though it eventually recovered. Bitcoin also fell, dragging ethereum and XRP down with it, given the heightened uncertainty. But overall, US stocks remained relatively unfazed by the announcement.

Making sense of market moves

Stay up to date on the latest market news with daily analysis of the investing landscape, served up Brew-style.

After all, Trump has long expressed his ire at the trade deficits between the US and China, but these tariffs look more like a first offer than a set-in-stone policy decision.

“Last-minute reprieves for Colombia, Mexico, and Canada provide some hope that President Trump is using tariffs as a negotiating tool rather than a permanent fixture of economic policy,” explained UBS CIO of Americas Solita Marcelli in a note today.

“If we can’t make a deal with China, then the tariffs would be very, very substantial,” Trump said.

Victims of the trade war

If and when the trade war really begins, smartphone and laptop sales will suffer. According to a recent study from the Consumer Technology Association, tariffs on tech products could lead to a $90 billion to $143 billion decline in US consumer spending power.

Goldman Sachs also highlighted companies with high revenue exposure to China that will be hit hard should the trade war escalate—these include Monolithic Power Systems, Las Vegas Sands, and Qualcomm, among others.

Protecting your portfolio: “More volatile markets require an increased focus on portfolio diversification and hedging approaches,” explained Marcelli. “We like high-quality government and investment-grade corporate bonds, as they offer appealing yields, some insulation against uncertainty, and can help diversify portfolios.”—LB

Making sense of market moves

Stay up to date on the latest market news with daily analysis of the investing landscape, served up Brew-style.