In the Nation's Interest

A Trade War with China Would Crush Multinationals Like Apple and Walmart

As Donald Trump prepares to meet China's president Xi Jinping, a lightning rod of 2017 is on his agenda: trade. 

Populist politicians have long opined on how U.S. trade policies with China have hurt certain American constituencies – namely, small businesses and factory workers. While these accusations largely ring true, the current protectionist policies under consideration risk generating blowback for another important economic faction: large American multinational corporations, which play a significant role in driving the U.S. economy.

If a trade war unfolded, this constituency would stand to lose the most. Many of America's biggest brands have considerable investment footprints in China: Nike, Walmart, Apple – the list goes on. These companies would stand at the front of the firing line if China reciprocated against any major trade actions by the U.S. Depending on the nature of the retaliation, expect revenues, profits, and share prices to suffer. Collateral impacts would include company workers in America, local economies where the companies reside, and the pension and retirement fund holdings invested in them.

The risks involved run deeper than reciprocal tariffs and trade restrictions. At the heart of corporate America's concern is future access to the Chinese market. Already, China is heading in the wrong direction here, as its policy environment has become increasingly hostile to the private sector and the foreign investors within it. A trade war could be the final straw that leads Beijing to severely contain American corporate interests in China, if not close off the market altogether. For many U.S. companies, China is their No.2 market and revenue-generator in the world. For some, it is already No.1. Therefore, any new barriers that emerge from a trade war domino effect would devastate American business.

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