Trump Tariff Strategy Creates 'Self-Inflicted Market Debacle': Analyst

On Friday, China’s finance ministry announced a 34% tariff on all goods imported from the U.S., effective April 10, in response to the U.S. administration’s 54% duties imposed by the Trump-led administration during the so-called Liberation Day last week.

Trump has threatened to impose an additional 50% duty on Chinese imports if Beijing does not drop the 34% tariffs.

On Monday, Trump hinted at more openness in trade negotiations with China after threatening to impose a 50% tariff on top of the 54% already levied.

“China also wants to make a deal badly, but they don’t know how to get it started,” Trump wrote.

Wedbush analyst Daniel Ives writes that “saying we can just make this in the USA” understates how complex the supply chain in Asia really is—and how electronics, chips, semiconductors, hardware, and smartphones have been built for U.S. consumers over the past 30 years.”

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“The reason I believe this is the biggest debacle ever seen in the markets is because its purely self-inflicted by Trump, and the logic about “near-term pain” is being way miscalculated, which speaks to our concern. It’s very easy to say “build in America” behind a microphone in the Beltway…the reality is so much different it’s almost a scary concept,” says Daniel Ives.

For U.S. tech/auto companies, tariffs are like flipping a boat with no life rafts.

The list of vulnerable companies is long and includes Apple Inc AAPL, Nvidia Corp NVDA, Microsoft Corp MSFT, General Motors Co GM, and Advanced Micro Devices, Inc. AMD, among others.

Building a factory in the U.S. takes four to five years. The analyst explains that high labor costs and other expenses in the U.S. don’t align with how modern supply chains are designed to operate. This makes it hard to compete with Chinese tech giants like BYD Co Ltd BYDDF BYDDY, Huawei, Alibaba Group Holding Limited BABA, Tencent Holdings Ltd TCEHY TCTZF—and many others—a big opportunity to expand their global reach.

Also, much of the key technology and intellectual property behind these supply chains is already deeply rooted in Asia. So, any effort to shift production to the U.S. would take at least a decade to make a real impact, Wedbush analyst writes.

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