As tensions rise between China and the U.S., the former has introduced a new collection of materials that are banned from being exported to the latter. This ban covers the export of gallium, germanium, antimony, and any super hard materials to the U.S. That’s worth noting as these materials are used in military applications.
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The new Chinese export ban doesn’t come without reason. In the ongoing trade war between the two countries, the U.S. banned the export of certain chips to another 140 companies in China on Monday. That marks the third chip export ban in as many years.
The Trade War That Never Ends
This trade war between China and the U.S. doesn’t appear to be ending soon. It started in 2018 during Donald Trump’s first presidency and continued throughout President Joe Biden’s time in office. With Trump set to take over as the next President of the U.S., it’s unlikely that the trade war will end any time soon.
In fact, Trump has already announced plans to increase tariffs on China by as much as 60% as part of this ongoing trade war. China already reacting with export bans in response to the Biden administration’s chip crackdowns, further retaliatory actions are likely if Trump moves forward with his tariff plans.
What Does this Mean for the Stock Market?
UBS Wealth Management weighed in on Trump’s tariff plans and is taking a bearish stance on the trade war. The firm estimates that stocks will fall as much as 10% due to the dispute with China. Sectors that it claims will be most affected include retail, automotive, technology, semiconductor, and industrial.
On the flip side, Bernstein Research analyst Stacy Rasgon, who holds a five-star rating on TipRanks, argues that “the direct impact of these new tariffs on semiconductors would be very small as imports of ‘raw semiconductors’ into the U.S. from these affected countries are tiny.”
With chip stocks at the center of this trade war, investors may want to bet on or stay away from them, depending on their preferences. A few examples of top stocks in this sector include Marvell (MRVL), Taiwan Semiconductor Manufacturing (TSM), Qualcomm (QCOM), and Broadcom (AVGO). You can compare these and other chip stocks with the following data:
