It has been a long time since the trade war talks began. At first, it was only a war of words between the world’s two largest economies. Slowly, it took a bigger form and is currently under effect. It had a huge impact on the US stock market and the US economy.
The first clash with China was around the start of the year but escalated quickly from the first week of March. The trade war rattled the Asian stock markets. The Materials sector took a hit after the first tariffs were imposed on Aluminum and Steel. Shortly after the news, China imposed retaliatory tariffs $50 billion US goods. EU got involved as America imposed taxes on car imports and many other duties on imports from their major allies. Canada announced of imposing a tax and announced of not discarding the duties unless the U.S lifted their won measure. The following image will help you get a deeper outlook on the trade war.
In the previous month, there were three primary events, the oil meeting in Vienna and the G7 summit had most of the impacts and the FED’s meeting became a secondary among these. The trade war concerns slowly seemed to fade away and the stock market bulls were back in the market for a short period of time.
Recently, the first blood in the trade war was drawn by the US as they implemented the tariffs and China did not waste much time and soon retaliated by imposing tariffs on $34 billion. Yesterday, the White House announced the imposition of tariffs on another $200 billion worth of Chinese imports. China has already announced the of reducing the tax on imports from India and other south-east Asian countries. Even though the trade war might be affecting their economy it might be a blessing in disguise for India.
Effects on Industries:
The imposition of taxes heavily affected the stock market and the Semiconductor industry took a lot of heat in these circumstances. The $1.54 trillion dollar industry started the year with a 3.72% change which fell during the last week of April trading at 0.35% but recovered soon and is now trading at 9.89% but is down by -4.13% in a month to date basis.
The soybean exports, airplanes, and the cars might also be heavily affected due to the implementation of tariffs. The airline’s industry, and the Industrial Conglomerates under the Industrial sector of the SP500 index is trading down on YTD basis as well as under the S&P500 index line. The sector were trading down by-13.45% and -11.60% respectively.
The Automobile and the Metals & Mining industry are also trading down in a YTD basis and all the four industries were more or less has directly or indirectly been affected by the trade war fears. The industries fell -6.58%, and -0.86% respectively in a Year-to-date basis.