Bulletin
Investor Alert

The Tell Archives | Email alerts

March 16, 2018, 10:45 a.m. EDT

Trump’s most market-rattling trade blasts are still to come, warns Pimco

Analysts: ‘We could see President Trump imposing widespread tariffs, potentially even on consumer electronics (like phones)’

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Broadcom Inc. (AVGO)
  • X
    Qualcomm Inc. (QCOM)
  • X
    S&P 500 Index (SPX)

or Cancel Already have a watchlist? Log In

By Victor Reklaitis, MarketWatch


AFP/Getty Images
A Chinese woman reacts to her iPhone.

The U.S. trade actions that could really jolt global markets have yet to hit, warn analysts at financial heavyweight Pimco.

Worries are persisting about a potential global trade war, after they were first sparked by President Donald Trump’s decision to move ahead with tariffs on steel and aluminum imports.

Such concerns among investors are justified, suggest Pimco’s Libby Cantrill and Tiffany Wilding.

“We believe the trade actions with the most significant potential economic and market impact — particularly the investigation into China’s use of American intellectual property — have yet to unfold,” they write in a blog post dated Thursday.

“We could see President Trump imposing widespread tariffs, potentially even on consumer electronics (like phones), and scaling back Chinese investment in the U.S.”

Check out: How investors can protect against a trade war — in one sentence

And read: The big-name stocks in the crosshairs as trade-war worries reboot

Those levies could happen due to an investigation into China’s practices that was launched in August, under Section 301 of U.S. trade law.

The trade developments tied to the outcome of the Section 301 probe are “still to come” and “may have the most significant impact,” say Cantrill and Wilding.

Their comments come as the U.S. government this week signaled it’s considering $60 billion in tariffs on Chinese goods, as well as aiming to cut the American trade deficit with China by $100 billion. In addition, Trump blocked Singapore-based chip giant Broadcom’s /zigman2/quotes/200646538/composite AVGO +1.21%  bid for American peer Qualcomm /zigman2/quotes/206679220/composite QCOM +2.06%  , after a government panel noted the takeover could deliver a boost to Chinese telecom giant Huawei.

But the analysts also strike an optimistic note in one section of their blog post, saying Beijing probably won’t go overboard with any retaliation.

Read more: 10 ways China could retaliate against U.S. import tariffs

And see: One way to play Trump’s tariffs — buy steel stocks and ‘enjoy the heat’

“Pimco’s base case is that China would have a relatively measured response to these actions,” Cantrill and Wilding write, though they “see a risk that trade tensions escalate depending on the size and scope of the tariffs and restrictions.”

Cantrill is the bond giant’s head of public policy, while Wilding is an economist covering the U.S.

U.S. stocks /zigman2/quotes/210599714/realtime SPX +1.60%   /zigman2/quotes/210598065/realtime DJIA +1.34% were on track for a weekly loss on Friday, with strategists blaming the pullback in large part on trade-war fears.

Click to Play

How we got here: A history of U.S. steel wars before Trump

President Trump is considering imposing steep tariffs on foreign steel and aluminum, sparking fears of a trade war with China and other nations. But he is not the first U.S. President to impose tariffs and quotas on foreign steel.

/zigman2/quotes/200646538/composite
US : U.S.: Nasdaq
$ 356.80
+4.28 +1.21%
Volume: 1.82M
Sept. 25, 2020 4:00p
P/E Ratio
66.92
Dividend Yield
3.64%
Market Cap
$144.33 billion
Rev. per Employee
$1.42M
loading...
/zigman2/quotes/206679220/composite
US : U.S.: Nasdaq
$ 114.50
+2.31 +2.06%
Volume: 11.72M
Sept. 25, 2020 4:00p
P/E Ratio
48.43
Dividend Yield
2.27%
Market Cap
$129.19 billion
Rev. per Employee
$607,486
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,298.46
+51.87 +1.60%
Volume: 2.18B
Sept. 25, 2020 5:06p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,173.96
+358.52 +1.34%
Volume: 391.73M
Sept. 25, 2020 5:06p
loading...

Victor Reklaitis is a London-based markets writer for MarketWatch. Follow him on Twitter @VicRek.

This Story has 0 Comments
Be the first to comment
More News In
Markets

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.