When does the US stock market start pricing in retaliation?
US companies and individuals own assets all over the world but increasingly, foreign companies aren’t allowed to own US assets. That’s the kind of thing that begs for retaliation and is indicative of the slow reversal in globalization that could one day become a fast reversal.
TikTok is at the top of mind right now because of the US threat of a ban. I can easily envision a scenario where China bans Apple in retaliation (China is 20% of Apple’s revenue).
However I understand why it’s happening. First of all, the social implications of TIkTok and short-attention span videos directed at children are undesirable. Even that isn’t the stated case, it’s a reason why no one will speak up for TikTok. The national security thing is probably a canard, as it was for Huawei, but it’s at least sellable.
What’s happening with US Steel is a different story.
The US increasingly looks like it will block the sale of US Steel to Japan’s Nippon Steel.
Biden will speak publicly on the deal today and say it’s “vital for it to remain an American steel company that is domestically owned and operated,” according to a Reuters report.
Shares of X fell 6.5% premarket after a 12.8% drop yesterday.
US Steel daily
Obviously, there are no spying concerns with US Steel and it’s not like Japan can pick up the factories and move them offshore. Moreover, Japan is the US’s strongest ally in Asia.
What’s happening here is that Cleveland-Cliffs with the backing of the United Steel Workers have powerfully lobbied for this move because Cleveland-Cliffs wants to buy US Steel at a cheaper price.
Again, this all begs for retaliation and while the timeline is unclear, it’s certainly not a good sign for global equities or global growth. That said, you have to play the hand that is dealt so look to invest in companies that benefit from protectionism.