Could $200 bln in tariffs on U.S. imports from China go into effect this week? Short Answer: Start date for tariffs could be announced
- There has been some speculation on cable news that the tariffs could go into effect this week. The comment period for the 25% $200 bln tariff tranche on U.S. imports from China expired on September 6. Tariffs can go into effect any day. Based on prior China tariff tranches (albeit there has only been two of them), the administration typically announces a start date about a week after the comment period ends. For comparison purposes, the $34 bln tariff tranche comment period ended on May 22. By May 29, the Administration announced a start date for tariffs which was June 15 (later it was delayed until July 6 when the tariffs actually went to effect). The review period for the $16 billion tariff tranche ended on July 31. By August 7th, the Administration announced that the tariffs would go into effect on August 23.
- Products included in the $200 bln tariff tranche include: food ingredients, auto parts, art, chemicals, paper products, apparel, handbags & electronics. Look for weakness in technology and China ADR's upon initiation of these tariffs. Tariffs may also be negative for the following stocks: AAPL, DWDP, KSS, WMT, TGT, NKE, SKX, KS, CLW, KHC, MGA, LEA, F, AAP, XRT, M, JWN, BBY, BID .. etc.
- President Trump tweeted over the weekend that Apple (AAPL) products may get more expensive after tariffs but the solution is to make products in the U.S. This is nothing too new, as the list of $200 bln in tariffs always included electronics, as noted above.
- China has vowed to respond with $60 bln in tariffs on U.S. exports to China. Products include: medium sized aircraft, metals, tires, golf clubs, crude oil, and liquified natural gas. These tariffs will begin upon U.S. initiation of its tariffs and should be negative for the following stocks: NUE, X, AA, KALU, DWDP, BA, UTX, EADSY, KLXI, RTN, GT, ELY, LNG, GLNG, GLOG, TELL, EOG, OXY, XOM, CVX, COP.
- Finally, President Trump has warned China that if they do respond to the $200 bln tariff tranche, the Administration will put tariffs on an additional $200 bln in tariffs which will cover basically all U.S. imports from China. There would need to be a comment period before these tariffs could go into effect which typically last 3-4 months.
- Once China puts $60 billion in tariffs on, it would cover nearly all the U.S. exports to China. There are other ways the country can respond such as disrupt operations of U.S. companies that do business in China by withholding licenses or launching monopoly investigations.