(San Francisco)

Make no mistake, the US’ new blacklisting of Huawei is going to have a serious effect on American tech companies. Huawei is deeply integrated with many US suppliers of technology components, so the import and export restrictions will be significant. Here is a lit of US companies with major relationships with Huawei: Qualcomm, Broadcom, Xilinx, Synopsys, Marvell Technology, Seagate Technology, Western Digital, Texas Instruments, and Micron technology.

FINSUM: The impact on the top and bottom lines of all these companies will take some time to figure out, but for now we thought it would be useful to know which ones are at risk.

(Washington)

President Trump warned yesterday that he hoped the US could avoid a war with Iran. Some of the president’s advisers are more hawkish on Iran that Trump himself. Tensions are rising sharply and Trump is reportedly quite against going to war with the middle eastern state. The White House has been warning about increased threats from Iran, but few details have yet been shred, even with Congress, so for now the specifics are unclear.

FINSUM: Since the details of the threat are not at all known, it is hard to make an opinion on a course of action.

(Beijing)

China is beginning its retaliation against the US’ increasing intense trade policy. The country is unloading its holdings of US Treasuries at the fastest pace in two years alongside the big rupture with Washington over trade. Its US Treasury bond holdings are one of China’s arsenal of weapons to retaliate against the US’ tariff hikes. According to Deutsche Bank’s chief economist, “The sheer size of [China’s] reserves and that this is even becoming a conversation means the market should take it seriously”. The country owns $1.12 tn worth of Treasuries.

FINSUM: This is quite a risk for the US as someone would have to absorb all those sold assets, and if they flooded the market, it would cause major volatility and sharp yield rises.

(New York)

The trade war has far reaching consequences. One way to think about it, as bleak as it sounds, is that there is no winner whatsoever. However, there are sectors, ETFs, and stocks that will likely lose more than others. The technology, materials, and industrial sectors stand to lose the most in a prolonged trade war as they have the largest proportion of manufacturing in China and the highest proportion of Chinese customers. Boeing and Ingersoll-Rand, for instance, are both very exposed to China. However, the greatest pain is likely to be felt by technology companies in the iShares PHLX Semiconductor ETF like Qualcomm, Micron Technology, Broadcom, and Texas Instruments.

FINSUM: Basically anyone making or selling a large amount of products in China is in trouble. We also wonder about how increased tariffs would flow through to retailers who source a high percentage of their products in China (e.g. Walmart, Target etc.).

(New York)

President Trump has taken a flurry of brisk actions as part of the ongoing trade spat between China and the US. After hiking tariffs and considering more, Trump now officially took the step of effectively outlawing US business with Huawei. He issued an executive order that gives the Commerce secretary power to review any transactions that could pose a risk to national security. The US Department of Commerce also put Huawei on its “Entity List”, which means US companies will need to apply for a license before doing business with it.

FINSUM: To be completely honest we are quite worried about the implications of this trade war and how it could play out on many fronts. The trade war almost feels like a microcosm of the larger political and cultural leadership struggle between the US and China and that worries us.