President Donald Trump\u2019s tough talk on trade with China, including threats of punitive tariffs and accusations of illegal currency manipulation, is bringing long-simmering tensions between the world\u2019s two largest economies to a boil. And that could have ramifications for many U. S. companies.
About a dozen Fortune 500 companies rely on China for more than 50 percent of their annual sales, per a recent Morgan Stanley ( MS ) report to clients. Semiconductor maker Ambarella ( AMBA ) gets 90 percent of its revenue from China, and other tech firms, such as Texas Instruments ( TXN ) and Marvell ( MRVL ), get more than 60 percent of their sales from the world\u2019s most populous country.
Some of the U. S.\u2019 biggest companies make significant profits in China
China also looms large for Apple ( AAPL ). The nation has surpassed the U. S. as the biggest iPhone market. It also is a big revenue-generator for casino operators such Las Vegas Sands ( LSV ) and Wynn Resorts ( WYNN ), which have invested heavily in the Macao gaming market in recent years.
Boeing ( BA ) is expecting big things from China, predicting last year that the country would need $1 trillion worth of aircraft over the next two decades. General Electric ( GE ) also is eager to expand its foothold in China and is partnering with companies there to expand into other emerging markets.
U. S. farmers also depend on China, which is now the second-largest market for American agricultural exports, worth $20.2 billion as of 2015 .
Mr. Trump this week scrapped the 11-nation Trans-Pacific Partnership (TPP) trade agreement that his predecessor Barack Obama negotiated. It didn\u2019t include China as a member and was at least partially aimed at stemming China\u2019s rising economic power across Asia-Pacific.
Sen. John McCain is one of the few Republican lawmakers to criticize President Trump for withdrawing from the Trans-Pacific Partnership. But McCa…
The new president\u2019s anti-TPP move was expected because he had criticized the deal during the campaign. Killing the TPP, though, could have unintended consequences. Economists at research firm Capital Economics argue that Mr. Trump\u2019s decision \u201ccreated an opportunity for China to expand its influence in Asia.\u201d
Since winning the election, trade isn\u2019t the only area in which Mr. Trump has ratcheted up his war of words with Beijing. In early December, he spoke with Taiwanese President Tsai Ing-wen and signaled he might abandon the decades-long \u201cOne China\u201d policy, which views Taiwan as a \u201crenegade province\u201d of China. He also has joined the international condemnation of China\u2019s island-building in international waters in the South China Sea.
\u201cNeither side wants a trade war, but there is a risk of escalation from these trade disputes,\u201d said Michael Hirson, Asia director for the Eurasia Group. \u201cThere also is a risk if President Trump presses China on some of these very sensitive security issues like support for Taiwan and territorial disputes in the South China Sea.\u201d
Should trade tensions escalate, China and the U. S. likely would target specific industries using tools like filing complaints with the International Trade Commission alleging unfair government subsidies. Competitors to U. S. companies, such as Boeing\u2019s European rival Airbus, could benefit as might other national players in the agricultural market, such as Australia and Canada.
\u201cChina may retaliate by saying \u2018I will not import as many soybeans from the United States,\u2019\u201d said Yukon Huang of the Carnegie Endowment for International Peace. \u201cI will no longer allow Apple to operate here and use China as the base of assembly and exports. I will buy Airbus planes rather than Boeing planes. I will no longer buy turbine engines and nuclear power plants from General Electric.\u201d
FedEx handles around 12 million packages a day and operates in more than 220 countries. The company’s founder and CEO, Fred Smith, met with Presi…
U. S. companies were already feeling uncomfortable in China. A recent survey released by the Chinese-American Chamber of Commerce found that 81 percent of respondents felt less welcome in China, and another 55 percent found that foreign companies were treated worse there than local ones.
\u201cGetting anything done in China or exporting to China requires various approvals,\u201d said Hirson, formerly the Treasury Department\u2019s top official in Beijing. \u201cGiven there is no real separation between the Communist Party and the regulatory regime, it\u2019s quite easy for the government to put regulatory pressure on American firms.\u201d
Even much closer to home, trade is a flashpoint for Mr. Trump. On Thursday, Mexican President Enrique Pena Nieto canceled a planned visit to the White House amid the dustup over President Trump\u2019s plans for a multibillion-dollar wall on the U. S. Southern border (and add a 20 percent import tax on Mexican goods to pay for it) in addition to his intention to renegotiate or scrap the North American Free Trade Agreement.
In a recent interview with CBS Morning News, FedEx ( FDX ) CEO Fred Smith called on Mr. Trump to \u201crethink\u201d his trade positions. Smith noted that the average American family benefits from trade \u201cto the tune of about $13,000 in lower-price goods than would otherwise be the case.\u201d
European Trade Commissioner Cecilia Malmstr\u00f6m described President Trump\u2019s tougher policies on trade and immigration as \u201cdoomed to fail.\u201d
For now, though, his \u201cAmerica First\u201d vow is carrying the day.<\/p>\n

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Sentiment rank: -5.5<\/div>\n

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