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原标题： Trade War Target Practice: China Will Punish These American Businesses Next
The screws are tightening on China, and so Beijing is set to return the pressure on American exporters.
Last week, President Trump announced that the proposed 10% tariff on $200 billion worth of China imports would be more than doubled to 25% in order to offset any change in currency prices. China warned that they are not going to take this sitting down, and said they have $60 billion worth of tariffs of U.S. imports ready to go should Trump pull the trigger sometime in early September.
The largest tariff hikes being prepared now by Beijing include wood products worth $1.83 billion (led by oak wood), liquefied natural gas ($675 million) and mineral ores ($778 million led by copper worth $542 million). “The inclusion of LNG is symbolic in that it was a product where China was expected to increase imports from the U.S. after meetings between President Trump and President Xi in November 2017,” says Chris Rogers, an analyst at Panjiva, a unit of S&P Global Market Intelligence.
Silvercrest Asset Management investment strategist Patrick Chovanec said last week that his reading from the latest ISM manufacturing survey data suggest lumberyards are already feeling the heat from the Trump-Xi firing squad. “Look at wood products in the ISM survey,” he says, sifting through a set of winners and losers in all this. “There are a couple of others that are relevant as well,” Chovanec says about manufacturers in trouble.
Among manufactured goods, China’s leading Made in America goods are focused on the technology sector, with the largest items being computer accessories ($647 million) and IT network equipment ($578 million), Panjiva research shows.
The Chinese duties are wide-ranging.
According to Panjiva, China’s $60 billion figure hits 56% of U.S. exports, including 85% of all electrical machinery and 75% of electronics. China cannot react symmetrically to U.S. duties based on dollar values because of the trade gap, so the market believes Beijing is likely to implement other measures. These measures include state-controlled companies paying duties or—and why not?—outright ignoring them in certain instances.
Take Smithfield Foods, a pork meat exporter, for instance. Pork meat has tariffs to get into China now. Smithfield is majority owned by China's Shuanghui International Holdings, now known as WH Group, the world’s largest pork meat company.
Another strategy is for China to simply increase tariffs above 25%.
“China doesn’t import enough from the U.S. to respond in-kind anymore,” says David Page, senior economist with AXA Investment Managers in London. “They could impose more difficult trading conditions for American companies. They haven’t hinted that they would do that yet, and I think that is on purpose. At this stage, I still think there is a chance for a negotiated settlement,” he says.
Page doubts a settlement will come this year in the trade war. He suspects Trump will hit China with $200 billion in tariffs next month.
In its recent retaliatory note, China’s Commerce Ministry said that the timing and likelihood of tariff implementation all depend on Trump. If Trump shoots first, China shoots back.
So far, China’s proposed retaliation has a lower weighted average tariff rate of 18%—based on AXA’s research—versus 25% coming from Washington.
“We think Beijing is demonstrating restraint in the hopes of preventing an escalation of tension,” says Page.
China's government is trying to inoculate the economy from higher tariffs.
Last week, the People’s Bank of China announced an increase in the reserve requirement ratio on onshore forex forwards, an over-the-counter currency transaction similar to an options contract. The move signaled to China investors that the central bank is keen to control the risks of market speculation and depreciation of the yuan, holding steady at 6.85 to the dollar.
Many investors believe the yuan will go over 7 as soon as September 3. That's when the White House is expected to announce its planned tariff package targeting $200 billion worth of Chinese imports.
“If we end up with across the board tariffs on China goods, it ends up raising consumer prices. Coca-Cola is raising prices because of tariffs on aluminum,” says Scott Clemons, chief investment strategist of Brown Brothers Harriman in New York. “And if I go to my boss and say I need a raise because my grocery bill is getting too high, inflation makes the Fed raise rates and you can get an inverted yield curve, which means the onset of a recession,” he warns.
Clemons does not see a recession coming anytime soon, even in a full-blown trade war. Clemons view has become market consensus.
Most estimates have a full-blown trade war—wherein Trump slaps tariffs on around $500 billion worth of Made in China goods—shaving at least half a percent off China's GDP and a whole percent off global GDP.
“If the world economy was limping along, all of this would be very bad,” says Clemons. But if you have the U.S. growing at 3% and let’s say China is growing at 4%, it’s still okay. Look at China’s internal economic data today,” Clemons says, citing manufacturing indexes and other items hard for the government to make up, like rail freight and electricity consumption. “It’s still pretty strong. I don’t think we will see the worst-case scenario play out,” he says.
It seems investors are ready for Trump’s September storm and China’s response. Sectors that are heavily dependent on China will be hard hit.
A Raw Deal
Raw materials and commodities are China's favorite import. To some analysts, China is punishing itself by importing inflation. U.S. companies, meanwhile, risk losing a solid market for lumber and liquefied natural gas once China retaliates.
For the publicly traded lumber companies, the growth of the Chinese market has been said by the American Hardwood Export Council to be “unlike anything ever encountered in this industry.” They estimate 60% of all hardwood lumber produced is exported, with 54% going to China. The Council opened offices in Shanghai and Hong Kong in 1992 when U.S. hardwood exports to Hong Kong were $7 million and $1 million to mainland China per year.
In 2017, hardwood lumber exports to China came in at $1.5 billion, according to Council estimates. The compound annual growth rate from 1992-2017 was 34% of total hardwood lumber in dollars exported to China whereas Japan and Korea decreased over that 25-year period by 11.47% and 1.8%, respectively.
Big lumber exporters like Potlatch (PCH) and Rayonier (RYN) say the China market is an expanding one for them. But in a June 2017 investor presentation, Potlatch was already predicting softer exports of both logs and lumber to China this year and next. New tariffs will exacerbate the forecasted trend.
On the energy side, China purchased 14% of all U.S. LNG exports from February 2016 to April 2018 , according to Thomson Reuters.
China threatened LNG exports in June but opted to only tax oil and diesel fuels in Xi Jinping’s July tit-for-tat move.
China is the world’s second-biggest LNG importer after Japan and is buying more gas as the government tries to wean the country off coal. The cut in U.S. LNG exports to China opens the door further to cooperation with Russia, now seen as a direct competitor to the U.S. in global gas markets.
However, it is even better for U.S.-friendly Australia. Aussie LNG exporters will likely get the bigger boost here as it is a top three LNG exporter after Qatar. Russian gas is mostly getting piped into China through new joint ventures in Siberia. Indonesia and Malaysia are also large local players in the LNG market, meaning China is unlikely to have a hard time finding suppliers.
The United States is expected to become the world’s third-biggest LNG exporter by capacity in 2019 but is not a top 10 exporter at this time. A China tariff will make sure they stay out of the top 10 until the trade war is over.
https://www.forbes.com/sites/ken ... -gets-more-tariffs/
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发表于 2018-8-8 21:20:00
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