The recent escalation in US-China trade tensions, which was highlighted by the imposition of significant tariffs on Chinese electric vehicles ( EVs ) and a subsequent Chinese anti-dumping investigation, indicates the potential resumption of trade war between the world’s two largest economies.
The information expands on President Joe Biden’s demand next month to impose tariffs on Foreign aluminum and steel. And it comes as Donald Trump and the president are competing to be seen as hard on China ahead of the US election in November.
This growth has potential for significant effects on global trade, financial security, and investment strategies. Global investors are confronting an increasing number of complexities to guard their investments and profit from new opportunities as the monetary superpowers implement tit-for-tat measures.
The current position recalls trade tensions that plagued US-China relations during the Trump administration, when goods were subject to tariffs for hundreds of billions of dollars.  ,
The Biden administration’s most recent actions, including tariffs on other Chinese imports, increase tariffs from 27.5 % to 100 %, as well as what the White House calls China’s unfair trade practices.  ,
Particularly, the US accuses China of flooding world markets with intentionally low- priced imports, which in turn undermines American companies.
China’s hostile move to start an pro- dumping probe into polyoxymethylene ( POM) copolymers, necessary in numerous industries from mechanical to electronics, underscores the tit- for- scar nature of the trade disputes.  ,
Other locations ‘ participation in this investigation, such as the European Union, Taiwan, and Japan, suggests that China is expanding its protective measures beyond the US, which could lead to a more disjointed international business setting.
As countries adjust their economic policies in response to taxes, increased market volatility and changes in currency values are usually the result of these changes.  ,
Buyers should therefore be prepared for short-term fluctuations as the markets react to changing business policies, as well as take into account hedging strategies to reduce risks.
Companies in the automotive industry can be expected to experience higher prices and disruptions in the supply chain as tariffs on Chinese EVs are set to soar. In consequence, we would urge investors to research mechanical stocks, especially those that heavily rely on imports or exports from China.
Additionally, it manufacturers that rely on these materials may be affected by the anti-dumping investigation into POM copolymers. Therefore, companies in the software industry are more likely to experience higher costs, which will impact their profit margins and investment performance.
Businesses affected will normally try to diversify their supply chains to lessen their reliance on Chinese exports. These businesses are the ones we believe will be better able to withstand industry turbulence.
Additionally, there is likely to be a tendency toward nearshoring or onshoring production to lessen the dangers of global trade wars, with investors looking into opportunities in areas like Southeast Asia or Mexico that could benefit from these shifts.
As global supply chains reconfigure, emerging markets outside of China may see increased investment and growth opportunities. On the whole, Vietnam, India, and Indonesia should become more attractive as investment destinations.
Investor focus, as always, should be on quality and resilience. Invest in well-established businesses with robust business models and strong balance sheets. These businesses are typically better suited to deal with economic downturns.
Also consider sectors that are less exposed to international trade fluctuations, such as healthcare, utilities and consumer staples.
Global investors have both challenges and opportunities because of the possibility of a new trade war between the US and China. While volatile short-term markets are likely, strategic positioning can help protect investments and profit from potential new growth opportunities.
deVere Group was founded and led by Nigel Green as CEO and founder.