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China could target U.S. tech stocks as part of the ongoing trade war, according to the top equity strategist at Goldman Sachs.
Peter Oppenheimer told CNBC's "Street Signs" on Tuesday that China may impose tariffs on industry components that could have an effect on supply chains.
U.S.Technology firms could be first in the firing line, Goldman's chief global equity strategist added.
"The target may be technology companies that have been the main driver of the equity bull market that we have seen in the U.S. and beyond," Oppenheimer said.
China has said it has no choice but to retaliate against the latest round of U.S. tariffs announced Monday by President Donald Trump . Washington will impose 10 percent tariffs on $200 billion worth of Chinese imports, and those duties will rise to 25 percent at the end of the year. The U.S. had already levied tariffs on $50 billion worth of Chinese products which Beijing responded to with measures targeting the same amount on American goods.
Oppenheimer said another direct effect of China's response could be to raise the cost of goods in U.S. stores and that could lead to an uptick in inflation.
"Maybe a small amount to begin with, but rising inflation at a time when you have had the economy growing for nine years, with extremely strong momentum at the moment, could feed into inflation and interest rate expectations," he added.
The direct effect of tariffs on global growth should be relatively small, according to Oppenheimer. But he cautioned that the follow-on impact on confidence and investment decisions could become a drag on higher risk assets.
"I think that's why the markets are implying rather more of an impact than most trade models at this stage would suggest," he said.
Oppenheimer said he expects low returns in the medium-term and is advising investors to be overweight in cash, stocks and commodities while underweight in government bonds and other credit.
On a tactical basis, Oppenheimer said there could be some opportunity in emerging market stocks and currencies, which are "beginning to look cheap."
BEIJING/WASHINGTON (Reuters) - China said on Tuesday that it had no choice but to retaliate against new U.S. trade tariffs, raising the risk that U.S. President Donald Trump could soon impose duties on virtually all of the Chinese goods that America buys.
The Chinese commerce ministry's statement came hours after Trump said he was imposing 10 percent tariffs on about $200 billion worth of imports from China, and threatened duties on about $267 billion more if China retaliated against the U.S. action.
The brief statement gave no details on China's plans, but Foreign Ministry spokesman Geng Shuang told a news briefing later that the U.S. steps have brought "new uncertainty" to talks between the two countries.
"China has always emphasized that the only correct way to resolve the China-U.S. trade issue is via talks and consultations held on an equal, sincere and mutually respectful basis. But at this time, everything the United States does not give the impression of sincerity or goodwill," he added.
Geng said he would not comment on "hypotheticals" such as what measures Beijing might consider apart from tariffs on U.S. products, saying only that details would be released at the appropriate time.
Trump warned on Monday that if China takes retaliatory action against U.S. farmers or industries, "we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports."
The latest U.S. duties spared smart watches from Apple (NasdaqGS:AAPL - News) and Fitbit (NYSE:FIT - News) and other consumer products such as baby car seats. But if the administration enacts the additional tariffs it would engulf all remaining U.S. imports from China and Apple products like the iPhone and its competitors would not likely be spared.
Last month, China unveiled a proposed list of tariffs on $60 billion of U.S. goods ranging from liquefied natural gas to certain types of aircraft - should Washington activate the tariffs on its $200 billion list.
"THIS ESCALATION VERY UNFORTUNATE"
China is reviewing plans to send a delegation to Washington for fresh talks in light of the U.S. action, the South China Morning Post reported on Tuesday, citing a government source in Beijing.
Collection of tariffs on the long-anticipated U.S. list will start on Sept. 24 but the rate will increase to 25 percent by the end of 2018, allowing U.S. companies some time to adjust their supply chains to alternate countries.
So far, the United States has imposed tariffs on $50 billion worth of Chinese products to pressure Beijing to reduce its huge bilateral trade surplus and make sweeping changes to its trade, technology transfer and high-tech industrial subsidy policies.
Beijing has retaliated in kind, but some analysts and American businesses are concerned it could resort to other measures such as pressuring U.S. companies operating in China.
A senior Chinese securities market official said U.S. trade actions will not work as China has ample fiscal and monetary policy tools to cope with the impact. The government already has been ramping up spending on infrastructure.
"President Trump is a hard-hitting businessman, and he tries to put pressure on China so he can get concessions from our negotiations. I think that kind of tactic is not going to work with China," Fang Xinghai, vice chairman of China's securities regulator, said at a conference in the port city of Tianjin.
Trump's latest escalation of tariffs on China comes after several rounds of talks yielded no progress. U.S. Treasury Secretary Steven Mnuchin last week invited top Chinese officials to fresh discussions, but thus far nothing has been scheduled.
"We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly," Trump said in a statement. "But, so far, China has been unwilling to change its practices."
U.S. Commerce Secretary Wilbur Ross said on Tuesday the next step on holding "constructive negotiations" was up to China.
"So the question about whether or when to have a discussion is very importantly in their ballpark," Ross told CNBC.
"RECKLESS" DECISION
Fang told the Tianjin forum that he hopes the two sides can sit down and talk, but added that the latest U.S. move has "poisoned" the atmosphere.
$200 billion worth of imports from China, and threatened duties on about $267 billion more if China retaliated against the U.S. action.
The brief statement gave no details on China's plans, but Foreign Ministry spokesman Geng Shuang told a news briefing later that the U.S. steps have brought "new uncertainty" to talks between the two countries.
"China has always emphasized that the only correct way to resolve the China-U.S. trade issue is via talks and consultations held on an equal, sincere and mutually respectful basis. But at this time, everything the United States does not give the impression of sincerity or goodwill," he added.
Geng said he would not comment on "hypotheticals" such as what measures Beijing might consider apart from tariffs on U.S. products, saying only that details would be released at the appropriate time.
Trump warned on Monday that if China takes retaliatory action against U.S. farmers or industries, "we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports."
The latest U.S. duties spared smart watches from Apple (NasdaqGS:AAPL - News) and Fitbit (NYSE:FIT - News) and other consumer products such as baby car seats. But if the administration enacts the additional tariffs it would engulf all remaining U.S. imports from China and Apple products like the iPhone and its competitors would not likely be spared.
Last month, China unveiled a proposed list of tariffs on $60 billion of U.S. goods ranging from liquefied natural gas to certain types of aircraft - should Washington activate the tariffs on its $200 billion list.
"THIS ESCALATION VERY UNFORTUNATE"
China is reviewing plans to send a delegation to Washington for fresh talks in light of the U.S. action, the South China Morning Post reported on Tuesday, citing a government source in Beijing.
Collection of tariffs on the long-anticipated U.S. list will start on Sept. 24 but the rate will increase to 25 percent by the end of 2018, allowing U.S. companies some time to adjust their supply chains to alternate countries.
So far, the United States has imposed tariffs on $50 billion worth of Chinese products to pressure Beijing to reduce its huge bilateral trade surplus and make sweeping changes to its trade, technology transfer and high-tech industrial subsidy policies.
Beijing has retaliated in kind, but some analysts and American businesses are concerned it could resort to other measures such as pressuring U.S. companies operating in China.
A senior Chinese securities market official said U.S. trade actions will not work as China has ample fiscal and monetary policy tools to cope with the impact. The government already has been ramping up spending on infrastructure.
"President Trump is a hard-hitting businessman, and he tries to put pressure on China so he can get concessions from our negotiations. I think that kind of tactic is not going to work with China," Fang Xinghai, vice chairman of China's securities regulator, said at a conference in the port city of Tianjin.
Trump's latest escalation of tariffs on China comes after several rounds of talks yielded no progress. U.S. Treasury Secretary Steven Mnuchin last week invited top Chinese officials to fresh discussions, but thus far nothing has been scheduled.
"We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly," Trump said in a statement. "But, so far, China has been unwilling to change its practices."
U.S. Commerce Secretary Wilbur Ross said on Tuesday the next step on holding "constructive negotiations" was up to China.
"So the question about whether or when to have a discussion is very importantly in their ballpark," Ross told CNBC.
"RECKLESS" DECISION
Fang told the Tianjin forum that he hopes the two sides can sit down and talk, but added that the latest U.S. move has "poisoned" the atmosphere.
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