Buy 5 Defensive Stocks As US-China Trade Conflicts Intensify

The trade conflict between the United States and China, which commenced March, is further intensifying as days progress. The U.S. stock markets have been facing severe volatility ever since primarily owing to imposition of various tariffs by the U.S. government and related trade conflict.

The situation is likely to aggravate in the near-term as President Trump has decided to implement the second phase with intentions of imposing tariffs worth $200 billion on Chinese exports. At this stage, it will be prudent to invest in defensive stocks to keep one’s portfolio safe from day-to-day market fluctuations.  

National Security Concerns Dominate Tariff Decisions

Trump administration is deeply concerned about China’s drive to unseat the United States as the primary developer and supplier of products in the fields of high-tech digital industries. Notably, most of the big manufacturers of these products are patronized by the Chinese government. These companies have become a serious threat to U.S. economic and military supremacy.

Information technology, telecommunications, and consumer electronics are the primary Chinese industries which have come under the first phase of 25% U.S. tariffs worth $50 billion. The first part of these tariffs worth $34 billion was implemented from Jul 6 and the remaining $16 billion of tariffs will be implemented within the next two weeks.

Further Tariffs on China

On Jul 10, the U.S. government released a list of 10% tariffs on Chinese goods worth $200 billion. The new tariffs will undergo a two-month review and hiring after which final decision will be taken. Last week, President Trump had threatened China that his administration may consider the possibility of imposing new tariffs worth $300 billion on China if it retaliates U.S. tariffs.

However, China has already retaliated with $34 billion of tariffs imposed on U.S. exports. Meanwhile, two rounds of meetings between high-level delegations of both governments took place in May. However, no proper resolution was reached. Further, President Trump’s intention of restricting Chinese companies from investing in U.S. tech firms to prevent technology export to China is likely to add fuel to the fire.

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