US winners and losers from trade tussle with China

Automobile companies were affected by the trade tensions bewteen China and the US, the world's two largest economies.
Automobile companies were affected by the trade tensions bewteen China and the US, the world's two largest economies.PHOTO: BLOOMBERG

WASHINGTON (REUTERS) - China on Wednesday (April 4) hit back at US President Donald Trump's plan to impose tariffs on US$50 billion (S$65.6 billion) of Chinese imports by proposing additional tariffs of 25 per cent on 106 categories of US goods, including soybeans, autos, chemicals and some types of aircraft.

The trade tensions brewing between the world's two largest economies hit global markets, with shares of industrial companies with exposure to Chinese markets, such as Boeing Co and Deere & Co, among the hardest hit.

The following are some of the possible winners and losers among US companies and sectors:

AUTO COMPANIES


A logo of General Motors pictured at its plant in Silao, Mexico, on Nov 9, 2017. PHOTO: REUTERS

* US automaker General Motors urged the two countries to engage in constructive dialogue over trade. The company's stock fell as much as 3 per cent before reversing course to close nearly 3 per cent higher.

* GM rival Ford Motor also lost as much as 3 per cent before rebounding to close 1.6 per cent higher while electric carmaker Tesla, which depends on China for 17 per cent of its revenue, fell as much as 5.8 per cent before retracing losses to end up over 7.2 per cent. Shares of Fiat Chrysler fell as much as 3.4 per cent before recovering to end up nearly 2 per cent.

* Ford said it encouraged both governments to work together to resolve issues.

BOEING & INDUSTRIALS


JP Morgan said the proposals from China looked to have been calibrated carefully to avoid a major impact on Boeing Co. PHOTO: AFP

* Aircraft maker Boeing Co closed down 1 per cent, weighing the most on the Dow Jones Industrial Average as documents from China's Ministry of Commerce and the US manufacturer showed the move would affect some older Boeing narrowbody models. It was not immediately clear how much the tariffs would impact its newer aircraft.

* Boeing said it was assessing the situation while analysts from JP Morgan said the proposals from China looked to have been calibrated carefully to avoid a major impact on the planemaker.

* Fellow Dow component 3M Co lost as much as 2.4 per cent before rebounding to end 0.6 per cent higher.

* Farming equipment maker Deere lost nearly US$10 per share at its lowest. The company urged the two countries to work toward a resolution to "limit uncertainty for farmers and avoid meaningful disruptions to agricultural trade". The stock ended 2.9 per cent lower at US$148.57.

TECH MAJORS

* The S&P 500 technology sector, which has the biggest revenue exposure to China among the benchmark's 11 major sectors, dipped 0.5 per cent before rebounding to end 1.3 per cent higher.

 
 

* Chip stocks were among the worst-hit in the sector with Intel Corp and Nvidia Corp both falling before retracing losses to end narrowly higher. Broadcom Ltd ended the day nearly flat at US$236.99. China's position as an assembly hub for electronic devices makes it the biggest consumer of semiconductors.

* Cisco Systems Inc closed slightly higher at US$41.20, but said it was "concerned that the remedy proposed by the (Trump) administration may harm American consumers and the US economy more than impacting alleged Chinese trade practices".

"At this time, we are analysing the impact of these tariffs on Cisco and reviewing plans to minimise the impact on our business, our customers and our partners," company spokeswoman Robyn Blum told Reuters.

WHISKEY

* Brown-Forman Corp , the maker of Jack Daniel's whiskey, slipped about 1 per cent before recovering to close up 1.3 per cent to US$54.71 after whiskey was singled out as the only spirit on which China planned to impose more tariffs.

* The Distilled Spirits Council, a US industry group, asked the United States and China to reach a resolution without subjecting American whiskey to more tariffs, which it said would harm Chinese consumers, its hospitality sector and US whiskey exporters. The Council also said US whiskey accounted for nearly 70 per cent of the total US spirits exported to China, by value, in 2017.

COMMODITIES & CHEMICALS


Exxon closed 0.2 per cent lower at US$74.87. PHOTO: REUTERS

* DowDuPont Inc said its agriculture unit could be affected by the escalating conflict, warning of price declines for soybeans, and a negative impact on US farmers. Shares closed up about 0.6 per cent at US$63.69.

* Grain traders Archer Daniels Midland Co and Bunge Ltd, which trade US soybeans in China, were both off as much as 1.5 per cent. Archer Daniels recovered to add 1.8 per cent to US$43.90, and Bunge gained 2 per cent to close at US$75.64.

* The American Chemistry Council (ACC) - which counts Exxon, Chevron , Monsanto and others as its members - urged the United States and China to come to an understanding. "Engaging in a trade war with one of our country's most significant trading partners is not the answer," said ACC Chief Executive Officer Cal Dooley.

Exxon closed 0.2 per cent lower at US$74.87, and Monsanto also fell 0.2 per cent to US$116.75. Chevron dipped 0.3 per cent to US$114.48.

WINNERS


US meat processor Tyson Foods Inc closed up 2.3 per cent at US$71.54. PHOTO: BLOOMBERG

* US meat processor Tyson Foods Inc, meat exporter Hormel Foods Corp rose on the prospect of a drop in prices of soybean - a key feedstock - following higher Chinese tariffs on US exports. Tyson closed up 2.3 per cent at US$71.54, and Hormel ended the day at US$35.87, a gain of 4.8 per cent.

 
REUTERS