President’s 100 Days in office.
US (Scott Bessent & Jamieson Greer) and China (Vice Premier He Lifeng) convene this weekend in Geneva for their initial trade talk since Trump unleashed a trade war against the world, as promised during his presidential campaign.
The trump administration has just passed its 100-days in office with nothing to show for except:
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Supply chain disruptions worldwide.
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Deep divide domestically.
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Not forgetting the mass layoff of agencies staff and all sorts of internal chaos.
Of the blanket tariffs imposed on a worldwide scale, Trump was ‘proud’ of the “breakthrough deal” (whatever that means) when he announced it on Thu, 08 May 2025. (see below)
Note, it’s only a PR publicity stun (for now).
The trade agreement is NOT signed yet because some final details are still work-in-progress and to be concluded in the coming weeks.
Western media is apt at wrapping vagueness in positivity when there is nothing really positive - agree?
Tariffs Mess, When Over ?
Mathematically, there were 60 countries affected by Trump’s tariffs.
Assuming UK started trade talk with US since 02 Apr 2025 and it took one month and then some to get a bilateral trade agreement “drafted”.
Safe to say it will take easily 58 months more for US to work through with the remaining countries (less Singapore as our Trade Minister & PM, have declared not to persue the matter).
For countries with tariffs more severe than UK’s of 10% for most exports & 25% on automobiles, steel & aluminium, quite certain more time is required to work out a trade deal with the US leaving as little tariffs than originally imposed.
Coming back to China tariffs, this is probably the “most important” tariff that Trump wanted to conquer, more than any others combined.
As of end 2024, China accounted for 13.4% of all US goods imports. (see above)
This was already a significant decline from previous years, with US imports from China totaled about $438.9 billion in 2024.
However, if history is accurate, current negotiation between US & China will NOT be a one month back & forth negotiation.
During Trump first presidency, it took his team almost 3 years to get the trade deal with China rectified and signed.
I have already touched on this in my earlier post.
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End Of The Tunnel.
Eventually, both countries will have to agree to scale back the massive taxes / tariffs, they have slapped on each other’s goods.
When that happens, it would bring relief to the world financial markets and companies on both sides of the Pacific Ocean, that depend on U.S.-China trade.
Experts Weigh-In.
As rightly pointed out by Foundation for Defense of Democracies, Senior China fellow, Craig Singleton:
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China might be heading to Geneva, to assess what is on the table or even just to buy time,
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This is because for now, there’s no shared roadmap or clear pathway to de-escalation.
Adding his view is University of International Business and Economics (Beijing), Economist, John Gong:
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In a worst-case scenario, China could walk away from the negotiations if it feels the U.S. side isn’t treating China as an equal or isn’t willing to take the first step to deescalate.
According to Atlantic Council, Dexter Roberts:
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China was ready for a rematch when Trump returned to the White House, this 2nd time.
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It had worked to reduce its dependence on America’s massive market, cutting the US share of its exports to just 15% in 2024 from more than 19% in 2018. (see below)
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Beijing is confident that the Chinese citizens are more willing than Americans to endure the fallout from a trade war, including falling exports and shuttered factories.
US export to China rose from 2020 to 2022 & started falling from 2023
At the Stimson Center, Director of Chinese program, Sun Yun agreed:
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The tariff war for China is very, very painful.
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However, it’s also imperative to withstand it, and the Chinese government is prepared to cope with it.
Rejoice Time?
The immediate outcome of the 2 days meeting was that both countries will reduce -115% tariffs against each other.
Meaning:
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US will still levy +30% tariffs on China.
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Chinal will still levy +10% tariffs on US.
US market is rallying on this piece of “good” news.
Is it even logical to rejoice & celebrate when it is not 0% tariff ?
Persistent tariffs would reinforce fears of:
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Prolonged economic strain.
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Supply chain disruptions.
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Inflationary pressures.
These have already contributed to a contraction in the US economy and declining business confidence.
Top 3 Sectors Most Affected.
Even though the trade between US and China is imbalance, China still buy goods from the US.
Below are the top 3 sector products China imports from the US.
Semiconductors / Technology.
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One salient example is $Monolithic Power(MPWR)$.
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It designs a variety of chips that go into everything from cars to appliances.
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More than 53% of MPWR's revenue in the past 12 months came from China.
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That's a higher reliance on China than any other company in the S&P 500.
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Based on past 12 months, MPWR is still down -9.29% as of 10 May 2025. (see below)
Unless the trade talk between the 2 giants go smoothly, MPWR may not live thru’ 2025 unscathed.
Just for the record, Monolithic is just one example of US semiconductor companies positioned to get hit by the China tariffs.
Remember on 18 Apr 2025, Nvidia CEO - Mr Huang has said that NVDA would take $5.5 billion in charges after US govt limited exports its H20 AI-chip to China, key market for one of its most popular chips.
Agriculture.
China is a major buyer of US agricultural exports with (1) soybeans, (2) grains (corn, wheat, sorghum) and (3) meat & meat produce (pork, beef & chicken).
Based on seaborned trade volume alone, US agricultural sector is expected to be significantly impacted, as it exported $18.2 billion worth of goods to China, or equivalent to 23% of US exports.
Breakdown of seaborned trade between the 2 largest economies as of early April 2025.
One possible victim caught in the cross fire is US global grain merchant - $Archer-Daniels Midland(ADM)$.
By mid April 2025, it was reportedly scaling back operations in order to control fixed overheads. (see below)
As a major US agricultural exporter, ADM is directly impacted by canceled Chinese orders and the broader downturn in US farm exports stemming from the trade war.
What was largely kept out of the media is that US agricultural sector is already hit hard by the tariffs. (see above)
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On Fri, 09 May 2025, ADM closed higher by +1.75% at $48.53 per share.
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Based on past 12 months, it’s still down by -22.51%., more severe than MPWR, comparatively speaking.
From agriculture sector point of view, the verbal rhetorics by Bessent saying that “they’re (China) playing with a pair of twos“ (poker card game analogy) amounts to nothing more than a smoke screen to hide the dire straits already facing US farmers.
Consumer Goods.
Within this broad category, it could be further broken down into (a) Apparels, and (b) Automobiles being the forefront sectors in heavy dealings with China.
Under apparels - $Nike(NKE)$ leads the headwind challenge. It relies heavily on Chinese manufacturing and is exposed to higher costs and supply chain disruptions due to tariffs.
As for automobiles, it would be $Ford(F)$ and $General Motors(GM)$. Both Ford & GM are exposed thru both their China sales and reliance on global supply chains for components, making it vulnerable to both direct and indirect tariff effects.
Like their peers, the Consumer Goods sectors’ stock prices have also been affected, at least for 2 of 3 mentioned in this post.
Based on the 3 stocks’ past twelve months performances. (see above)
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NKE has been down by -37.12% since its peak on 24 Jun 2024 at $97.17 per share.
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Ford was down by -15.41%, peaking on 18 Jul 2024 at $14.55 per share.
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GM was the stock that reported a gain of +5.16% based on 12 months performances.
“Fair is foul and foul is fair”- current US-China tariffs war shows how both sides’ claims of fairness mask the mutual harm & confusion caused by the ongoing deadlock. “Fix it”, I say !
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Do you think anything good will come out of the 2-day talk’?
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Do you think investors should bail from the 3 affected sectors for now?
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Comments
US-China trade talk doesn't guarantee stock to be up.
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