Who are losing in the trade war?

Both are and may be 20% more for China. Trump will not want to lose the re-election from this trade war.

·         The average consumer will spend an extra $800 per year due to the tariffs.

·         From my conservative estimates, U.S. GDP will be decreased by at least 0.5% when there is a full-fledge trade war with China. In addition, the stock market will crash and 200 million will be laid off.

·         Many companies supplying products to China will lose. They are virtually all global companies from the U.S. For example, the total sales for Micron’s is 57% from China and Apple’s is 20%.

·         Many companies depending on products from China for consumers and manufacturers will lose big. The following are the percentages of our products from China: 42% apparel, 69% shoes and 88% tops.

·         U.S. companies in China will be the target for revenges. Many depend on the profits in China. Surprisingly Apple is not the first target. The first target is Ford. It reflects these U.S. auto companies are not that beneficial to China as they used to be.

·         American farmers will be the greatest losers.

·         Huawei is requesting Verizon to send them 1 billion for the royalty in using their patents in 5G. The U.S. is in a dilemma of not paying it with ‘reasons’. However, if it happens, many countries including China will pay U.S. companies royalties.

·         China would withdraw the U.S. debts. Currently China and Japan are the top foreigner buyers of our Treasuries. In 2018, China has 1.13 trillion (used to be 1.3 trillion in 2013; it is about 28% of 4.02 trillion in U.S. Treasury bills.

·         The U.S. will gain a few jobs but the number is negligible as most will be gained by other low-wage countries. Automation have eliminated a lot of jobs already.

·         The universities will run into financial problems due to the reduced number of foreign students from China. Tourism is hurting. I estimate most U.S. companies producing luxury products will lose the sales by more than 20% due to Chinese tourists and buyers in China. 

·         Many of the universities and corporations will stop co-operative researches with China. It does not look good for other countries to co-operate with us.

·         The supply of rare earth elements will be cut to export to the U.S. This will affect to many industries from mobile phones to electric cars.

Trade war with China

The following is from my new book "Trade War with China". Click here.

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I bet we will have a trade war with China. It is not beneficial to both China and the U.S. Hence, there could have a settlement with China satisfying our terms. However, the damages have been done and China will better prepare for the next trade war with us. It will be at least during Trump’s presidency. We have trade wars with many countries including EU, Japan and even Mexico. Our allies eventually would side with China even they suffer from their own trade war. Russia would trade more with China and could be a military ally.

Chapter 1 states my predictions and my reasons. The next chapters describes impacts to us, China and rest of the world. There are not winners between the countries involved in the trade war. However, there are a few winners such as Vietnam, Ericsson and Nokia.

The next chapters describe why the trade war is started and the two most affected companies: Huawei and Apple.

I selected the following chapters from other books to be included in this book.

Book 2: “Can China Say No?”

Book 3: “Understand ourselves and China”.

Book 4: “Global economies”.

The specific chapters are:

·         “Can China Say No?” Book 2 Chapter 1.

·         “Shenzhen”. Book 2 Chapter 5.

·         “The myths on China”. Book 3. Chapter 1.

·         “Actions to fix our problems”. Book 3. Chapter 2.

·         “Consumption vs. investing”. Book 3 Chapter 3.

·         “My economic theories”. Book 4 Chapter 28.

·         “My coconut theory”. Book 4 Chapter 29.

Many U.S. books are very hawkish on China. They make U.S. citizens feel good as they are what they want to hear. Chinese are in the opposite side. I hope my book is in the middle. I try to find out facts and express them with my opinions.

I’m not a US basher. US is still the leader in most sectors such as economics, science, military and politics. China has been reducing the gaps in the last 30 years. My personal wealth is tied up in the US stock market, so I hope the US would prosper. Being a US citizen born in Hong Kong, US is first to me and China second. We have less problems than China. However, if we do not know our problems, how can we fix them? Several articles including the article “Actions to fix our problems” suggest how to fix our problems.

Winners / Losers of a trade war

The following are based on my prediction on a full-fledged trade war with China. Buy the winners and short the losers. When the trade war is settled, reverse the directions.

Losers are:

·         American farmers and their suppliers such as fertilizers and farm equipment will be the chief losers. The government subsidies cannot last forever. Many have already lost their farms while their products have been filled up fast in storage. Currently Brazil and Argentina are filling the gaps.

·         Many chip suppliers to China will lost a lot of sales as China is the chief importer. It will take at least a year for countries to take up the slack. In 10 or so years, China will develop their own chip products. Hence, they will be back to normal in 2 years and will face China’s competition in 10 or so years.

·         Many U.S. companies are still profiting in China. These days are numbered.

·         China in the future will reduce the number of buying new planes from Boeing and/or switch the orders to Airbus. Today China still needs a lot of new planes and hence the effect may not be immediate. China is the largest market for airplanes.

·         Australia siding with the U.S. will be a serious loser. Australia supplies China with iron ores and agriculture products.

·         Many Chinese companies especially Huawei will suffer a lot even with the help from Chinese government. Huawei could lose their popular mobile phone sales outside China when Goggle stops suppling the apps to them.

·         The markets in both the U.S. and China will fall.

Winners are:

·         Vietnam is the obvious the largest beneficiary from the Sino-U.S. trade war. Many factories have moved from China to Vietnam. Many are owned by Chinese. China has helped Vietnam to improve their infrastructure. It has already gained about 8% of its GDP from the new business and is experiencing an influx of direct foreign investment.

·         India could be a beneficiary too. They have a lot of problems to be fixed internally. They should copy the model of China by opening special economic zone.

·         Malaysia is a winner too. China will cut the rare earth elements to the U.S. Many countries including U.S. and Australia produce these elements but they do not refine them from the ores due to the damages to the environment. Most will be refined in Malaysia instead of in China.

·         Countries may replace the U.S. as chips and products supplier to China. Taiwan and many EU countries are obvious beneficiaries. Many of them do not want to do business with China at the fear of being punished by the U.S.

·         Russia will replace the U.S. as the supplier of energy such as LNG to China. They will have a closer tie than their history.

·         South East Asia countries and some South American countries such as Brazil and Argentina will benefit to replace American agricultural products to China.

·         Ericsson and Nokia will be the primary supplier of 5G network to countries that ban Huawei’s products.

·         Many companies such as Samsung and Apple will capture Huawei’s mobile phone market in Europe.

·         More tourists and Chinese students will come to Europe particularly the EU countries.

Some of the symbols of the affected companies and country ETF are: VNM, INDA, EWT, ARGT, ERIC and NOK.

Related articles: 1

https://seekingalpha.com/news/3468784-countries-benefiting-trade-war


Related post: Click here. 

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For more of my reasoning, check out the book described next. It has 1,000 pages (6*9) for $9.99. It could be the best $10 you ever spend.

The above is an abstract from my book "Complete the Art of Investing" which is available from Amazon.


I challenged to have the best-performed article in Seeking Alpha history, an investing site, for recommending 10 or more stocks in one year after the publish date. The concepts for that article are discussed in this book.

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