By A presidential victory for Donald Trump will trigger a sell-off in Chinese stocks that would then create a buy-the-dip opportunity, Christopher Wood of Jefferies said.
In a Bloomberg TV interview, the global head of equity strategy said investors are excessively concerned by the Republican candidate’s loud opposition to Beijing. He’s far less pessimistic.
While Trump has asserted that he will levy a 60% tariff rate on all Chinese imports to the US under his administration — part of a broader pledge to impose universal duties on all foreign products — Wood says it’s largely bluster.
He says critics are not paying attention to Trump’s track record with China. In his view, the former president isn’t likely to raise tariffs as much as he touts.
“Bottom line, if Donald Trump’s elected and Chinese stocks collapse, that’s an opportunity to add to China,” he outlined.
He continued: “People have forgotten that Donald Trump did the big trade deal with China in January 2020. A trade deal was done, and it was all hunky dory, and Donald Trump was going to run on that presidential campaign as I’m the guy who’s negotiated the best trade deal with China since WTO.”
The agreement effectively capped further escalation to the 2018 trade war between the US and China, requiring that Beijing buy an additional $200 billion of US exports.
But that past precedent also shows that Trump is willing to negotiate with Beijing. For instance, he suggested that China would accept higher duties if Trump could relax restrictions on advanced US semiconductor technology. Chip export controls have increased on chips in recent years amid a rising concern for national security.
“[Trump’s] not one of these national security guys in Washington who believe China is a threat to US hegemony,” Wood said. “In fact, he’s the opposite”
Trump would likely view increased semiconductor trade as benefitting US business, as a cut-off Chinese market has already proven a challenge for some leading chipmakers, such as Nvidia.
