The potential of a trade war between the US and China could have a significant effect on American industries, with tit-for-tat tariff proposals by China too.

1. How a Potential Trade War
Could Affect American
Auto Manufacturers
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The potential of a trade war between the US and China
could have a significant effect on American industries,
with tit-for-tat tariff proposals by China too.

2. www.tradezero.co +1.954.944.3885
The first lesson to learn in stock trading is that the stock market
does not exist in a vacuum. Stocks rise and fall based on various
factors that have a bearing on the industries and companies they
represent. One such significant factor that could particularly
affect industrial stocks is making investors, stock traders and
market analysts anxious.
A Trade War that Is Hoped Will Never Materialize
The tariffs on 1,300 Chinese goods, including industrial, medical,
transportation and technology products, that Trump plans to
impose have been the major topic of discussion all through the
stock market and financial circles. There’s some anxiety around
as to how this could impact the industries that have their products
made in China and imported to the US market.
The consultation period and negotiations between the United
States and China were expected to ease the fears of retaliation by
China towards American companies functioning there and
American products imported to China. But China has gone ahead
and proposed its plan of imposing tariffs on 106 American
products imported to the country, including automobiles,

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chemicals, beef and soy, among other products. The makings of a
full-blown trade war are there. And there were already fears in
Detroit regarding the potential impact on General Motors’ ($GM)
and Ford’s ($F) vehicles manufactured in China.
Two of Detroit’s Big Three in a Dilemma
General Motors manufactures the Buick-badged crossover
Envision in China, thanks to the low cost of production in China.
It is then imported to the United States to be sold in the markets
here. The company, though, has said that it is still not time to say
exactly how the impact would be on the future production of the
Envision. GM manufactures the Envision in partnership with the
China-owned automobile company SAIC. It imported close to
30,000 Envision crossovers to the United States and is the largest
exporter of vehicles built in China to the US.
But the Envision does share its platform and other mechanical
parts with the Equinox vehicle badged by Chevrolet, another of
GM’s brands. The Equinox is currently manufactured in Mexico
and Canada. There is also the similarity with a crossover of
another GM brand, the GMC Terrain. So the proposed tariffs are

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not expected to cause as big an impact on General Motors,
particularly since there are only 30,000 models involved. One
analyst believes that it wouldn’t be too hard for GM to shift the
manufacture of Envision to Canada or Mexico where the Equinox
and Terrain are manufactured.
Ford’s plans could be affected too. The company has plans to
transfer production of its Focus to China from Mexico next year. If
the tariffs do come into effect, that could force the company to
rethink its plans. Right now, Ford is waiting and watching, hoping
that the countries resolve their issues.
Hope for Successful Negotiations Still Bright
Thankfully, the American tariffs and the proposed counter-tariffs by
China will not be imposed right away, making it possible for
negotiations to cool down the tensions if both the countries can
actually settle their differences. This period of consultation could
last for two months from the publication of the list of Chinese
products on which American tariffs are proposed to be imposed. The
list was published on Tuesday, the 3rd
of April, 2018.

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Let’s not forget that the United States also exports automobiles to
China, boasting a surplus of around $8 billion. In 2016, the US
exported $11 billion-worth of vehicles to China as per the office of
the US Trade Representative.
Escalation of Trade War Expected to Be Nothing but Negative
for Economy
According to the Fed’s James Bullard, if the trade war escalates
the US economy would be significantly impacted negatively. And,
the fact that there are talks about tariffs that are more generalized,
and not restricted to aluminium and steel, is a key development.
This generalization has macro-economic significance, Bullard
believes.
The hopes of the trade war being averted are still bright though. On
Wednesday, the 5th
of April, 2018, the dollar rose against the yen.
Dollar/yen was back close to 107 from having dropped below 106.
The stock recovery currently supports dollar/yen.