Little time? At the end of the text there is a summary.
It was not so long ago that Donald Trump had something to celebrate. It turns out that the import tariffs of the Chinese economy are "really hurting," the US president said last August, expressing persistence to his battered peasants: "We win, but we have to be strong," he tweeted.
Barely half a year later, the White House is much smaller. The negotiations in the trade dispute with Beijing have resumed, and both sides are constructive. "The talks with China are going very well," Trump commented peaceably last week.
Behind the conciliatory notes is likely to be a loss event that has not taken place at the trading opponents, but at home in America: Since Apple has revised its sales forecasts down because of the weakening iPhone sales down, there is a fear of the markets on the future. "Apple has shaken the markets with its China warning, who will be next?" The Wall Street Journal asked worriedly.
Companies report problems in the China business
In fact, in recent months, a number of US companies have sounded an alarm regarding the China business.
- Barbie maker Mattel warned in October that "we see a slowdown in our China business." Only an unexpectedly good sales of fashion dolls in the United States compensated for the losses for the time being.
- At jewelery maker Tiffany, the slowing consumption of Chinese tourists in the US and Hong Kong contributed to disappointing sales in the third quarter.
- The Californian wine industry reported a 15 percent decline in exports to China in the first ten months of 2018.
- The car company Ford sold in China until November 30 percent less than the year before. In November alone, sales fell by 50 percent.
GM reported a 15 percent decline in its China sales in the third quarter.
- Electric car maker Tesla, which is building a new plant near Shanghai, lowered prices for some of its models to keep its customers at bay.
- The logistics group FedEx revised its earnings expectations for 2019 downwards, because world trade had weakened.
Still, these are individual messages, but they fit together to form a picture that displeases investors. Investment bank Barclays has lowered its S & P 500 earnings forecast for 2019 from 17 to 16, stating that the outlook for the global economy has deteriorated, mainly due to the slowdown in China. The IMF has lowered its growth forecast for the country from 6.4 to 6.2 percent for 2019, the lowest rate since the early 1990s.
For the misery Trump is not the sole responsibility, even if the IMF refers to the "negative consequences of recent customs actions". Beijing has home-made problems, such a huge debt of companies. But Trump's punitive tariffs are adding to the burden on the economy, and the fear of an escalation is depressing the mood not only of the stockbrokers, but also of the consumer. In November, Chinese retail sales rose as low as they had in 15 years.
Such a reluctance to buy in the world's fastest-growing consumer market also affects many US corporations, even though America's economy as a whole is less vulnerable than other economies thanks to the huge single market. More than eight percent of the goods and services exported by US companies go to China. And: From 2000 to 2018, these exports increased by 530 percent.
So while Trump is at war with China's exporters, the world's factory has long since become a department store in the world - and shelves are also supplied by manufacturers from California, Michigan or Pennsylvania. And so his campaign brought the man in the White House a first Pyrrhic victory: In December, China's exports to the US fell by 3.5 percent - but imports shrank at the same time by 35.8 percent. The result: the highest bilateral surplus in China since the beginning of 2016.
Tech industry particularly exposed
The China Blues will not only hit Apple. "There will be more," predicts Stephanie Link of the investment company Nuveen on CNBC. Still, most companies have not published quarterly results. But analysts have begun to identify the weak in the convoy, which, like Apple, generates a significant proportion of their sales in Asia.
So China is the world's largest market for semiconductors. Corporations like Intel, Qualcomm and Texas Instruments, which accounted for almost half of China's third-quarter revenue, are under increased scrutiny.
The tech industry is particularly exposed. According to the investment bank Barclays, the technology stocks of the S & P 500 index achieved 60 percent of their sales in international markets, twice as much as the average of all stocks. However, the slowdown not only affects exporters, but also those who produce locally.
Recommendation for Starbucks downgraded
Many US companies have built their hopes on China's rocketing rise. GM already sells more cars in China today than in North America. For Starbucks, which is already serving its coffee at 3600 locations, China is likely to become the largest market before the United States. A scenario that triggers an alarm: Goldman Sachs has downgraded the stock recommendation of the coffee chain.
The aircraft manufacturer Boeing expects China to order nearly 8,000 jets worth more than a trillion dollars by 2036. The energy company Westinghouse, which filed for bankruptcy in 2017, hopes that the reactor business in China will give it a bright new future.
Whether these forecasts can be maintained remains to be seen. Like Apple, one or the other group might be tempted to attach their own business failure to economic development. The cooling in China give it the necessary "cover", argues Dan Clifton of the financial advice Strategas Research.
Trump seems less relaxed
So Ford had a problem in China long before the economy began to spin. And others show that you can succeed in adverse circumstances. The sneaker manufacturer Nike has increased its sales in China in the quarter by the end of November by a whopping 26 percent. The weakening region was the best.
The White House has decided to defend forward. "It will not be just Apple," chief economist Kevin Hassett said frankly, "Damn many US companies selling in China will see their sales expectations downgraded next year until we get a deal with China." Thereafter, says the Trump consultant calmly, the sales would normalize again.
The president himself, however, does not seem so relaxed anymore. Back in the fall, he had only "talked about tariffs, tariffs, customs duties," said stock expert Clifton CNBC. But then he suddenly began to rave about a "great deal".
Perhaps Trump has come to the fore that his strategy is backfiring.
In summary: With his customs policy, US President Trump wanted to stop China's advance in the US. At least after the sales warning from Apple, which leads the company back to problems in the Chinese market, it shows that the Trump instigated trade dispute to boomerang for many US companies. Not only automakers such as Ford and Tesla are affected, but also the coffee house chain Starbucks, for example. Although some of the companies already had problems before China weakened, Trump has become mean-spirited - and is now on talks.
Note: In an earlier version, aircraft manufacturer Boeing expects China to order nearly 8,000 jets worth more than $ 1 billion by 2036. In fact, it's more than a trillion dollars. The corresponding position has been corrected.