China Just Warned It Will Retaliate Against Trump's Tariffs

China just issued a dire warning.China

Specifically, officials in Beijing vowed this morning (Jan. 30) to retaliate against American companies when U.S. President Donald Trump executes his Jan. 22 plan to impose tariffs on Chinese solar panels.

Or on any of the Red Dragon's imported goods, for that matter.

Today's warning, delivered by the American Chamber of Commerce in China, comes just hours before the president will issue his first State of the Union address tonight. He is expected to address China's "unfair trade practices" in his speech, reported The New York Times today.

Here's how a U.S.-China trade war could hurt your wallet....

China's Retaliation Is Inevitable

Money Morning Oil & Energy Strategist Dr. Kent Moors saw China's retaliation coming.

Kent has followed U.S.-China trade relations for 35 years, and shortly after Trump announced the tariffs, he told his readers that "the Fortress America approach is not a solution. It merely assures additional problems. Among other matters, we now await a response from Beijing that will almost assuredly limit American access to the much larger Chinese market."

That response came this morning...

Editor's Note: Get expert insight on the U.S.-China trade war sent straight to your inbox in real-time, completely free, here.

Officials in Beijing told American business representatives there that the Red Dragon is prepared to push back at the United States, according to William Zarit, the chair of the American Chamber of Commerce in China, in NYT today.

"I have been told by certain officials that yes, definitely, there will be retaliation," Zarit added at a briefing in Beijing.

The Red Dragon's executives and diplomats, however, were not specific about how their country would strike back.

But a look back into recent history reveals a few clues as to what China might do...

China Could Target These 2 American Sectors

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Beijing will likely punish U.S. farmers and aircraft manufacturers.

That's what Lester Ross, chair of AmCham China's policy committee, told NYT this morning.

"From the Chinese government's perspective, I think it would be likely that it would target sectors that have political resonance in the United States," he said.

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Indeed, China imported $21.4 billion in American agricultural products in 2016, according to Iowa Farm Bureau data from March 2017 - more than half of which was soybeans.

"Agriculture affects a sector where the United States enjoys a surplus and where there are competitors in other parts of the world for the commodities that China imports," Ross said. "And the producers are predominantly in states which voted for President Trump."

Ross likewise mentioned aircraft manufacturers, such as Boeing Co. (NYSE: BA), as another possible target of an eventual Chinese trade war,

You see, Boeing competes against Airbus of Europe to sell jetliners to Chinese carriers. On Jan. 10, French President Emmanuel Macron said on a visit to China that an $18 billion contract with the country for 184 Airbus A320 narrow-body jets would be finalized soon, according to Bloomberg that day.

That's $18 billion Boeing didn't get.

But when it comes to this particular aircraft company, Money Morning Executive Editor Bill Patalon is anything but bugged out about its future prospects.

Here's why...

Boeing or Bust

"The jetliner king has years of order backlogs on its books already," Bill told his Private Briefing subscribers on Jan 22. "It keeps selling new airliners and just boosted its 20-year outlook on commercial airplane demand. And now it's getting into drones - with a plan to 'Tesla-ize' aviation. What's not to like?"

Indeed, BA was the Dow's top-performing stock of 2017, soaring 89.5% compared to the S&P 500's 21% rise.

On top of that, at the December Dubai Air Show, Boeing locked in $50 billion in new orders - outperforming all other competitors present.

When Bill first recommended Boeing in 2011, its share price was $61.92.

Today, it's at $337.23.

That's a whopping 445% price increase.

Bill suggests an "accumulate" strategy with Boeing, which is to say, add to your position on pullbacks. And if Beijing does target Boeing, it'll be another opportunity to do just that.

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