Tesla, Chips, and Banks Tumble as China’s Retaliation Stokes Fears of Widening Trade War
US chip companies, banks and oil majors fell sharply on Friday after China retaliated to Trump’s tariffs with steep duties, in an intensifying trade war between the world’s two largest economies that cast a shadow on global growth.
China slapped additional duties of 34% on US goods, set to go into effect April 10. It also announced curbs on exports of some rare-earths and added several US firms to its export control list and the “unreliable entities” list, which allows Beijing to take punitive action.
The action followed US President Donald Trump’s 34% duties on imports from China announced on Wednesday, which triggered a massive market meltdown on Thursday. The latest levies were on top of the 20% tariffs on China imposed earlier this year.
Investors were already fretting over potential supply chain disruptions, price hikes and demand destruction for everything from cars and smartphones to sneakers.
Shares of Tesla and Apple – among consumer tech companies with a large exposure to China – were down 8% and 4%, respectively. While both companies have local production in China, duties on US-imported parts could squeeze margins and force price hikes.
“Several tech companies have established local supply chains in China. Most source components from China already, and hence, disruptions should be controllable, though we do expect price hikes on parts and components not being sourced from China,” said Nishant Udupa, practice director at research firm Everest Group.
For Tesla, already in a bruising price war with local Chinese rivals, raising prices would pressure demand further.
