Here Are Trump’s Trade War’s Early Victims

The pain of the US induced trade war is being felt by a number of companies.

Companies is China are the object of the greatest interest in this aspect.

Late last week, China issued the threat of imposing new tariffs on 5200 US products in case the US decides to impose the 25 per cent tariffs threatened by it earlier on Chinese goods worth $200 billion.

The main sectors that are feeling the pinch of the trade war are as follows:

Cars and motorbikes

Apparently, so far, the most affected is the car industry with three global car companies complaining that their performance is being impacted by the changes to trade policies.

Profit forecasts for 2018 were lowered by carmakers Ford and General Motors primarily because of enhanced prices of steel and aluminium prices because of the tariffs. The revenue outlook for 2018 was brought down by Fiat Chrysler because of drop in demand in China where customers deferred purchase in the hope of lower car tariffs.

Import tariffs on cars were announced to be reduced to 15 per cent from 25 per cent applicable from July 1 by the Chinese government in May. This move is being viewed as China’s effort to ease trade tensions with the US. However, the authorities imposed a 40 per cent import tariff on US cars on July 6 to retaliate US tariffs on Chinese goods worth $34 billion.

A slow down in sale in China also forced largest UK car maker Jaguar Land Rover to report a loss for the first time in three years.

Food and drink

To tackle the changed global tariffs, a number of companies in the food and drink industry are lowering their profit projections and enhancing prices.

Profit forecast were recently reduced by Tyson Foods citing lowering of US meat prices because of new tariffs on exported US pork and beef.

Reports claimed that the price of Jack Daniel’s and other whiskeys would be increased by Brown-Forman, the US spirits and wine giant, in some European countries.

And according to a Wall Street Journal report, higher freight rates and metal prices has forced Coca-Cola to contemplate increasing prices later in the year in North America.

Other affected sectors

One of the ways to reduce the impact of Chinese tariffs is to do less business in the country which is being contemplated by some companies with Chinese exposure.

More products are being moved out of China by Toymaker Hasbro. More supply chains outside of China is being sought to be used by US conglomerate Honeywell. And according to reports, the amount of goods sourced from China is being reduced by home furnishing company RH.

World economy

As much as 0.5 per cent could be shaved off the global economy because of the tit-for-tat tariffs, says the International Monetary Fund.

According to media reports, the tariffs concerns has caused consumers sentiments to fall in the US, says a report while another showed a slowing manufacturing sector in July in China.

0.81 percentage points off global gross domestic product could be lost to a full-blown escalation of the trade dispute, estimates Morgan Stanley.

(Adapted from the BBC.com)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s