On April 4 China responded to U.S. proposals of up to $60 billion in tariffs on Chinese goods by imposing its own on American imports. This included plans, cars, beef, soybeans, and chemicals. The announcement sent the Dow Jones Industrial Average down almost 500 points before it staged a rally in the late morning and early afternoon. However, key U.S. companies that rely on Chinese business have not fared as well.
Boeing Co. (NYSE:BA), which had hoped to leverage its position to advocate against further trade measures, saw its stock 2.76% in early afternoon trading on April 4. China has emerged as a key market for Boeing and other commercial jet manufacturers. The tariffs will target some of Boeing’s older narrowbody models, but it is unknown whether or not it will dramatically impact newer planes like the 737 MAX family models.
Caterpillar Inc. (NYSE:CAT) was also down 1.7% in early afternoon trading, rounding out the top two decliners on the Dow. The heavy-machinery producer has made significant inroads in China as the country has accelerated its own infrastructure plans. The sparking of a trade war between China and the U.S. could dramatically hinder its growth prospects in Asia going forward.
A NAFTA settlement in the coming weeks could improve investor optimism going forward but the U.S.-China trade spat is unlikely to be resolved in the near future. Global markets will continue to experience volatility during this trade bout between the two largest economies in the world.
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