uploads/2019/05/flag-540874_1280.jpg

How Tech Stocks Are Performing amid US-China Face-Off

By

Updated

Trade talks

The US-China trade talks, which seemed headed in the right direction until last month, have come to a standstill. Earlier this month, US President Donald Trump accused China of going back on its previous commitments and increased tariffs on $200 billion worth of Chinese goods from 10% to 25%. The tariffs were increased even as US-China trade talks were underway. Last year also, we saw both the United States and China impose tariffs on each other’s goods even as talks were underway.

Article continues below advertisement

Tit-for-tat tariffs

Meanwhile, despite President Trump’s warning, China went ahead and increased tariffs on $60 billion worth of US goods. Equity markets have come under pressure this month amid the escalation in US-China trade talks. The SPDR S&P 500 ETF (SPY) is down 2.6% for the month, while Apple (AAPL) has shed 6.7%. Chip stocks have also come under pressure after the restrictions on Huawei. Qualcomm (QCOM), Intel (INTC), and Broadcom (AVGO) have lost 9.7%, 12.4%, 13.5%, respectively, this month and are underperforming the S&P 500 as well as the NASDAQ 100 Index (QQQ).

Who broke the deal?

Meanwhile, while previously, President Trump accused China of reneging on its commitments in the trade talks, China has sought to turn the tables and accused the United States instead. Cui Tiankai, China’s ambassador to the United States, said, “It’s quite clear it is the U.S. side that more than once changed its mind overnight and broke the tentative deal already reached.” He added, “we are still committed to whatever we agree to do, but it is the U.S. side that changed its mind so often.”

Amid the US-China trade war, the end consumers in both countries might have to pay a heavy price. Read Consumers Are a Casualty on Both Sides of the US-China Trade War for more analysis.

Advertisement

More From Market Realist