Tesla, chipmaker, and bank shares fall on China trade war fears

Shares of major US chipmakers, banks, and oil companies fell sharply on Friday after China retaliated against tariffs imposed by US President Donald Trump with steep tariffs of its own, in an escalating trade war between the world’s two largest economies that has cast a shadow over global growth.

According to Reuters, China imposed an additional 34% tariff on US goods, scheduled to take effect on April 10. China also announced restrictions on exports of some rare earth elements and placed several US companies on an export control list and an “unreliable entity” list, allowing Beijing to take punitive action.

This action follows Trump’s imposition of a 34% tariff on imports from China on Wednesday, which triggered a major market crash on Thursday. The latest tariffs are in addition to the 20% tariffs imposed on China earlier this year, according to Al Arabiya. Investors were already concerned about potential supply chain disruptions, higher prices, and the destruction of demand for everything from cars and smartphones to sneakers.

Tesla shares fell 8% and Apple shares fell 4%. Both are among the consumer technology companies with significant exposure to China.

“A number of tech companies have established local supply chains in China,” said Nishant Udupa, practice director at research firm Everest Group. “Most of these companies already source components from China, so disruptions may be manageable, but we expect prices to rise for parts and components that are not sourced from China.”

Tesla is already locked in a bitter price war with its domestic Chinese competitors, so higher prices would further squeeze demand.

Chipmakers are also expected to face challenges, even though the United States exports small amounts of electronic equipment to China.

Shares of Intel, Applied Materials, and Qualcomm fell between 5% and 8%. Fears of a widening trade war between the United States and China cast a shadow over oil prices, already under pressure from an expected increase in OPEC+ production in May.

Shares of oil giants Exxon Mobil and Chevron fell more than 5%. Shares of SLP, the largest oilfield services company, fell 10%, and shares of Marathon Petroleum, the largest US refiner by volume, fell 6%.

Bank stocks continued their declines since Thursday amid concerns that the trade dispute could undermine consumer confidence, reduce spending, and reduce demand for loans.