THURSDAY, March 28, 2024
nationthailand

Dispute impacts supply chains

Dispute impacts supply chains

Last week, the US announced that it is considering raising tariffs on US$200 billion (Bt6.67 trillion) worth of imported Chinese goods from the initial proposal of 10 per cent to a hefty 25 per cent.

The US trade representative will do a public hearing later this month and could announce the new tariffs in September. Note that the US had earlier imposed 25 per cent tariffs on Chinese products worth $34 billion, with another $16 billion yet to be announced, thus bringing the total tariffs to $50 billion. Prior to that, US tariffs on steel and aluminium had been imposed but they are applicable to all countries, including China. 
In terms of retaliation, many countries and China have already announced their tariffs on US products in response to the steel and aluminium tariffs. China has also retaliated with tariffs on $34 billion worth of US goods. However, the second largest economy is yet to announce any specific tariff targets in retaliation against the $200 billion tariffs proposed by the US.
Although both sides said they are open to talks to settle the dispute, the war of words through the media seems to indicate otherwise. The impact on supply chains has surfaced in manufacturing PMI among developed economies such as the US and Japan. There is evidence of delays in the manufacturing delivery time, rising inventory of raw materials, rising input costs and higher selling prices of products. At the end of the day, the stock market will no doubt remain volatile!

After taking some profit at 1,720 points, there should not be a hurry until clear signs show in the following issues: capital movement and whether or not it will stage a return, and the gradual announcement of earnings results of Thailisted companies which will affect market valuation.
At this time, new investment may be traded off with higher risks. It’s necessary to focus on big caps in SET 50 which are laggard the stock market in this round to limit downside market risks. We prefer fundamental “buy”. We like TISCO, TMB, PTTEP, RATCH, CPALL, BBL, TOP. 
Trinity Securities
 

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