Shares of US exporters fall as China retaliates on tariffs

Shares in US aerospace giant Boeing Co were last down 3.3 per cent making it the biggest drag on the Dow.
Shares in US aerospace giant Boeing Co were last down 3.3 per cent making it the biggest drag on the Dow.PHOTO: AFP

NEW YORK (Reuters) - Shares in US exporters of everything from planes to tractors fell on Wednesday (April 4) after China retaliated against the Trump administration's tariff plans by proposing duties on key US imports including soybeans, planes, cars, beef and chemicals.

China was hitting back against US President Donald Trump's plans to impose tariffs on US$50 billion in Chinese goods with similar tariffs on US goods even as Trump said the country is "not in a trade war with China".

Industrial stocks appeared to be the hardest hit.

Shares in US aerospace giant Boeing Co were last down 3.3 per cent making it the biggest drag on the Dow though it was not immediately clear how much the tariffs would affect Boeing's newer products. The United States exported US$15 billion of aircraft to China in 2016, ranking it equally with agricultural products like soybeans, according US trade data.

Agricultural machinery maker Deere & Co was down 4 per cent and DowDuPont Inc was down 1.3 per cent.

"Everybody knew they were going to retaliate. The question was how strong of a retaliation. Today's move clearly shows that they mean business," said Adam Sarhan, chief executive of 50 Park Investments in New York.

Investors in the S&P 500's technology sector were also rattled since it has the biggest revenue exposure to China out of the benchmark's 11 major sectors. Chipmakers such as Nvidia Corp, with a 3 per cent drop, and Intel Corp , with a 2.1 per cent decline, were among the biggest percentage losers in that sector.

"These are some of the companies most exposed to potential tariffs. They would affect their business directly, immediately," said Brad McMillan, chief investment officer of Commonwealth Financial Network in Waltham, Massachusetts.

Shares of Caterpillar, also a big exporter to China, fell 2.4 per cent. Chemical provider Chemours Co pared premarket losses but was still down 0.4 per cent in the regular session.

Soybean exporter Archer Daniels Midland Co and another agribusiness Bunge reversed their premarket losses and were last up slightly.

With the three major US indexes well off their January records after taking a massive tumble on Feb 9, at least some investors were hoping that US stocks will bounce back if earnings growth meets strong Wall Street forecasts in the first-quarter reporting season, which starts this month.

"Obviously we need kind of a quiet period on these headlines and we need to focus on what is ultimately important and that is earnings. So I am hopeful over the next couple of weeks that earnings will be that shiny object that everyone can focus on," said Jack Ablin, chief investment officer at Cresset Wealth in Chicago.