Kai Pfaffenbach | Reuters
In early morning trading on Monday, shares of some chipmakers, retailers, Apple and Wynn Resorts tumbled on fears that the U.S. and China’s trade war is escalating.
President Trump announced last week the U.S. would levy tariffs of 10% on the remaining $300 billion in Chinese imports. China appears to be retaliating by letting its currency weaken below 7 yuan per dollar and halting its imports of U.S. agricultural products.
American chip stocks continue to suffer after China’s Huawei was put on a blacklist that restricted American firms from selling products to the company. These stocks count on the business from Huawei, which uses the chips for smartphones and laptops.
Nvidia was down 3.6%, AMD fell 3.7% and Micron dropped 3% on Monday in early trading.
Apple was also 2.6% lower Monday morning as Apple relies on a large portion of sales coming from China. Despite Apple saying they moved some production out of China, tariffs can lead to major price increases for the iPhone and other Apple products.
Department store Kohl’s is also hurting, down as much as 3% in premarket trading, as the new round of tariffs impacts apparel, footwear and toy products far more than the previous round. Retail analysts say retailers, specifically department stores, are poorly positioned to compete in the trade war environment with already low margins.
Share of casino operator Wynn Reports was down nearly 4% in premarket trading. Wynn is particularly vulnerable to a trade war because the company relies heavily on the business of its casinos on the Macau peninsula in China. A contraction in business in Macau would weigh on Wynn’s margins.
Dow futures implied a drop of more than 360 points at the open.