Five ways China is hitting back against US tariffs

Published On Feb 4, 2025, 8:40 AM

The ongoing trade war between the US and China has escalated with China's announcement of retaliatory tariffs on US goods, including a 10% tariff on coal, liquefied natural gas (LNG), agricultural machinery, and a 15% tariff on crude oil. Although these tariffs target about $20 billion of imports, this is a small fraction compared to the $450 billion of Chinese goods targeted by the US. China hopes to send a message without causing significant damage to its economy, as it can source these products from other countries. They are also investigating Google for anti-monopoly practices and have placed PVH, the owner of Calvin Klein and Tommy Hilfiger, on an 'unreliable entities' list, complicating their business operations in China.

Stock Forecasts

XOM

Negative

The impact of tariffs on US fossil fuels is likely to be modest given China's ability to import from alternative sources like Russia and the substantial LNG exports to other markets from the US. However, this might negatively affect energy companies directly involved in exports to China.

PVH

Negative

PVH's inclusion in China's 'unreliable entities' list suggests potential sanctions and operational hurdles in a significant market. This may result in decreased sales and overall financial performance in the near term, affecting investor sentiment negatively.

MP

Positive

Given the high reliance of the global tech supply chain on rare earth metals, and China's monopolistic position in refining these materials, potential export controls could lead to supply constraints. However, US companies are less reliant on Chinese imports for critical materials, which could offset some negative impacts.

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