What Commodities May Suffer from US-China Trade War

What Commodities May Suffer from US-China Trade War

Without a doubt, Trump’s decision to impose tariffs on imported solar panels broke the barrier on the stock markets. Today experts expect tit-for-tat trade war around the world. And if to take into consideration the amount of import and export of the United States, it becomes clear that many major commodities will be in the firing line.

China today is one of the main partners of the U.S. and, judging from the comments of the U.S. President, Beijing is the main issue of the American industry. Chinese top officials were restrained in their response, however, now they are ready to respond with a blow, as Trump gave them a free hand in subjecting U.S. companies with large Chinese operations to tax or antitrust probes.

So what commodities are under risk?

Aluminum

31% of half-finished Chinese aluminum is imported to the U.S. At the moment Trump’s Administration is processing Section 232 study submitted by Commerce Secretary Wilbur Ross and, according to the insights, this document welcomes new tariffs. U.S.-based Century Aluminum Co. required 20% tariff on supply from most countries and experts predict that it will be set.

Steel

On the one hand, the USA is the world’s biggest importer of steel, on the other hand, China consumes all steel that produces on domestic needs. So the U.S. imports steel from Canada, Brazil and South Korea. That means that the U.S. is not that dependent on Chinese products, however, the impact of the raised tariffs on imported steel will affect mostly Americans rather than global market. Still, there is always a possibility that these tariffs will raise other protectionist campaigns in the countries that import steel to the U.S.

Agriculture

In 2017, U.S. sold soybeans to China in the amount of $13.9 billion. However, with the news of bumper crops forecast from Brazil to Argentina, China gets a perfect possibility to select sellers and retaliate U.S. imports.

Meat

Since 2003 to 2016 China had a ban on American beef because of the mad cow disease accidents. In 2017 import was restored in the amount of $1.3 billion. In September the World Trade Organization allowed to investigate China’s tariff-rate quotas on American agricultural products, as these measures subvert U.S. farmers.

Oil

Production of shale oil allowed the U.S. to enter top three global producers, and in 2017 the import of American oil increased by almost 1,500%. Still, China prefer to import Russian and Arabian oil, so any restrictions imposed on Chinese export of oil would do harm to Asians.