On Thursday, March 22 President Donald Trump signed a memorandum that threatens to impose up to $60 billion in tariffs on imports from China. The tariffs would be implemented only after a consultation period in which lobbyists and legislators would have the opportunity to whittle down the list of products. However, the possible easing of the policy did not prevent steep declines for U.S. indexes on Thursday and Friday.
Boeing Co. (NYSE:BA) shares dropped 2.8% week-over-week as of close on Friday, March 23. The concern is that the tariffs in question could lead to retaliation from China in moves that would directly hinder Boeing’s business. China has grown into a significant market for Boeing’s commercial jets in this decade, with almost 25% of all commercial planes sold by Boeing heading to China last year. The news of future adjustments may have boosted Boeing, as it was one of only two positive gainers on March 23, when the Dow shed over 400 points.
Caterpillar Inc. (NYSE:CAT) shares dropped 1.78% on March 23 and were down 7.7% week over week. Caterpillar has also seen business boom in China in recent years. The equipment dealer has looked to increase its footprint in the largest construction market in the world. China’s Belt and Road initiative, which has ballooned to over $1 trillion, represents a huge opportunity for Caterpillar going forward. Caterpillar did not comments on the potential downsides of tariffs going forward.
