Trump's Tariff Turmoil Shoots Down These 3 Aerospace Stocks

U.S. President Trump-imposed tariffs worth $34 billion on Chinese goods were implemented on Jul 6, thereby aggravating the already tensed trade situation between the two largest nations. This is the first time that the United States has officially imposed tariffs targeting Chinese imports, following months of verbal accusations that cheap Chinese imports are unfairly swelling America’s trade deficit.

Adding to the woes of global trade, China’s Ministry of Commerce announced tariffs of equal size on certain American goods that China imports.

What’s in the Tariff?

The tariff imposition that triggered a full-blown trade conflict between America and China involves the imposition of 25% duties on imports of Chinese products, ranging from farming plows to semiconductors, heavy machinery, and airplane parts. 

According to major media sources, the Trump administration is preparing to hit China with another $16 billion worth of import duties. This additional tariff is expected to be in effect in another two weeks’ time. Trump further suggested that America may eventually impose a tariff worth $500 billion, a figure that will exceed China’s annual goods exports to the United States.

Such higher import duties will impact U.S. manufacturing industries that rely on cheap Chinese raw materials and in turn, will weigh on their revenue growth. 

How Will Aerospace Stocks be Affected?

Heavy equipment manufacturers like airplane makers, as well as companies involved in the global aerospace supply chain, are at the highest risk. Anticipating a significant impact of the recently imposed tariffs on these corporations, investors became skeptical about the stocks’ stability, as evident from the sudden downfall in their share prices.

Moreover, in March 2018, Trump announced tariffs of 25% and 10% on imported steel and aluminum, respectively, from China. While the announcement came with the objective of protecting domestic steel and aluminum industry by increasing production and job creation, the decision does not bode well for heavy-duty manufacturers as they will now have to use costlier U.S. origin raw materials.

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Duke Peters 1 year ago Member's comment

Just closed it out.