Beans, Boeing, BMW, & BBQ Battered As Trade War Winners & Losers Emerge

 

With the world's second biggest economy now retaliating against the first (or not) fusilade in the global trade war from the world's biggest economy (for now), tens of billions of dollars in tariffs are wiping out equity market capitalization world wide.

As Bloomberg  reports, China will levy 25 percent tariffs on imports of 106 U.S. products, with U.S. farmers, plane- and automakers likely to bear the brunt.

That’s in response to 1,300 Chinese products that might be subjected to 25 percent tariffs from the U.S.

Bloomberg  lays out the losers and the winners...

Loser: America’s Midwest Farmers 

The tariffs are a huge blow to American growers, especially those in Midwestern states that Trump needs to win re-election in 2020. China is the biggest buyer of U.S. soybeans, picking up about a third of the entire U.S. crop. The trade is worth about $14 billion. Soybean prices dropped as much as 5.3 percent in Chicago trading, the most since July 2016.

Loser: U.S. Automakers (including Tesla)

China, which imported 36,000 vehicles from the U.S. in the first two months of the year, also plans to slap tariffs on most vehicles, including electric cars. Tesla Inc. is at particular risk as it relies on American-made vehicles for all its Chinese sales. Other U.S. carmakers such as General Motors Co. and Ford Motor Co. manufacture in China.

Loser: German Carmakers

If China passes an incremental 25% tax on U.S.-specific auto exports, then it would essentially be a tax on Southern German auto, specifically BMW and Mercedes SUVs, which are built in the U.S. and exported to China, Evercore ISI analyst Arndt Ellinghorst writes in a note. The Detroit 3 largely build their Chinese products in China and will be less affected.

Loser: Boeing

China’s tariffs could hurt sales of some of Boeing Co.’s best-selling planes, such as the 737 family of passenger jets and put the company at a disadvantage to Airbus SE. China is a crucial market for Boeing. More than 50 percent of the commercial jetliners operating in China are Boeing airplanes.

Loser: Generic Drugmakers

Companies such as Mylan NV face having to pay more for raw ingredients, such as insulin used by diabetics and the anti-allergic-reaction drug epinephrine. Other products such as vaccines and antidepressants are on the list of goods that will be hit by tariffs.

Loser: Chinese BBQ

China is by far the world’s biggest buyer of soybeans, which are mostly crushed and fed to pigs. The tariffs on U.S. soybeans could ultimately drive up costs for Chinese pig farmers and meat prices for 1.3 billion citizens.

And the 'winners' are.

A much smaller list in this global negative-sum race to the bottom...

Winner: U.S. Metalworks

The latest round of proposed tariffs target several specific categories of steel and aluminum made in China. That’s on top of duties announced last month, meaning that some forms of those products will face a 50 percent fee to reach the U.S., further boosting prices for some products.

Winner: South American Growers

Brazil and Argentina are the main competitors to U.S. growers in the market for soybeans and corn. They’ll be eager to pick up any lost business, but they won’t be able to completely replace U.S. trade. Argentina’s crop has been hurt this year by drought, so the country won’t be able to sell as much.

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Full China Tariffs list below...