Apple, Starbucks and many others may face huge losses in a China-US trade war
In the early hours of March 23, Beijing time, CNNMoney.com reported that a trade war between U.S. and China would be very bad news to some big U.S. companies.
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U.S. stocks plunged on Thursday as investors worried about the Trump administration’s announcement of tariffs on Chinese goods.
If China acts in retaliation to the tariffs, then Apple (NASDAQ:AAPL), Boeing (NYSE:BA), Intel (NASDAQ:INTC) and other large international companies part of the Dow and S&P 500 may face difficulties due to their operations in the Chinese market.
In the past quarter, Apple earned $18 billion in revenue from the Chinese market, accounting for 20 percent of the company’s total sales. Boeing’s sales in China last year was close to $12 billion, accounting for nearly 13 percent of its total revenue. Meanwhile, chip giant Intel and other semiconductor companies such as Texas Instruments (NASDAQ:TXN), NVidia (NASDAQ:NVDA), Micron Technology (NASDAQ:MU) and Qualcomm (NASDAQ:QCOM) also have large businesses in the Chinese market.
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In addition, the Trump administration has obstructed Singapore chip maker Broadcom Corporation (NASDAQ:AVGO) from acquiring Qualcomm. This move further deepens geopolitical tensions.
China’s growing middle class is very attractive to big American companies.
Nike (NYSE:NKE) will report its earnings after Thursday. Nike sold $1.2 billion worth of sneakers and sportswear in the Chinese market in the last quarter, accounting for 15 percent of its total revenue.
3M (NYSE:MMM) had 10 percent of its sales last year from the Chinese market, and its 2017 Chinese sales rose 16 percent over the previous year, compared with a 1.5 percent increase in U.S. sales.
General Motors (NYSE:GM) said earlier this year that the company and its joint ventures sold a record total of four million cars in the Chinese market in 2017. The achievement was largely due to strong demand for Cadillac and Buick models.
Starbucks (NASDAQ:SBUX) has also invested heavily in the Chinese market and is seeing returns gradually. The coffee giant now has about 14 percent of its sales coming from the Chinese market, which is growing faster than its U.S. sales and sales in other developed markets.
Casino and resort giants Las Vegas Sands (NYSE:LVS) and Wynn Resorts (Nasdaq: WYNN) will also suffer as a result of China’s potential measures, with more than half of each company’s revenue coming from Macau.
While U.S. President Donald Trump’s goal may be to protect American workers from the pressures of Chinese rivals, many American companies will suffer huge losses if a trade war begins.