President Donald Trump’s aggressive attitude and often mixed signals in his trade warfare with China are affecting the shares of U.S. firms that are most reliant on the world’s second-largest economy.
U.S. shares rose over 1% on Monday after Trump prophesied a U.S.-China trade agreement following comments by Vice Premier Liu He, who has been leading the dialogue with Washington, that China was willing to settle their dispute through “calm” agreements.
On Friday, the S&P 500 dropped 2.6% after Trump declared a further duty on some $550 billion of Chinese imports in retaliation for Beijing’s announcement of more levies of its own earlier in the day. Trump further sent a tweet demanding U.S. firms seek alternate options to doing business with China; however, appeared to back off the warning on Sunday.
Escalating dilemma related to Trump’s intentions regarding the year-old trade spat is contributing to pain on Wall Street, where traders are frightened that tariffs could push the U.S. economy right into a recession.
U.S. semiconductor stocks have also underperformed this month. Micron Technology, Qualcomm and Qorvo each get 50% or more of their income from China. Consumer electronics and other items made with semiconductors will be included in new U.S. tariffs, beginning on Sept. 1 and Dec. 15, the U.S. government stated this month. The Philadelphia Semiconductor index .SOX has lost nearly 6% in August.
Trump’s widening trade battle and China’s slowing economic expansion have hurt several different U.S. industrial and material firms that lately have relied on China to drive their progress.