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U.S.-China trade tale gets twist of winners, losers in Trump's reign

Staff Writer |
With the arrival of China-bashing Donald Trump as president in the White House, analysts are drawing up shortlists of winners and losers from any eruption of tensions between the world's top two economies.

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It's still far from clear how plans will shape up under Trump, who on the campaign trail blasted trade deals with China that generated record U.S. deficits, China Daily reports.

What is clear: China will retaliate against any protectionist steps-not only are there reported contingency plans, but the historical example of measures against Japan when tensions flared in 2012.

Widespread boycotts of American products in China could hit brands including Nike Inc, General Motors Co, Ford Motor Co and Tiffany & Co, while U.S. sanctions would put Chinese electronics exporters such as Lenovo Group and ZTE Corp under pressure, according to Credit Suisse Group AG. Domestic competitors stand to gain from diminished commerce.

"Most people I talk to tend not to think a trade war is the base-case scenario-they treat it as a black swan event," said Hong Hao, an analyst at Bocom International Holdings Co based in Hong Kong, in a phone interview.

"I think the possibility is much larger," Hong added.

Trump has pledged to use "every lawful presidential power to remedy trade disputes" with China, including tariffs. He once broached a tax of 45 percent on Chinese imports, then denied bringing it up.

After the presidential inauguration on Jan 20, the Global Times, said Trump's speech signaled a "high possibility" of trade friction.

The MSCI China Index could fall by as much as 30 percent from current levels if the US and China impose 45 percent tariffs on each other, according to Jonathan Garner, a Morgan Stanley strategist based in Hong Kong.

In the case of more modest 5 percent tariffs, the Chinese index would be little changed from current levels, according to Garner. In December, Garner was bullish on China shares, seeing the Shanghai Composite rising to as high as 4,400 this year. The gauge rose 0.4 percent to 3,136.78 on Jan 23.

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