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The expanding US-China trade war has big implications for major economies and markets around the world. 

In early May, the Trump administration slapped 25% tariffs on $200 billion worth of imports. China struck back by vowing to raise tariffs further on some $60 billion in US exports.

Meanwhile, US technology shares have been whiplashed by Washington’s decision to impose a ban on American companies doing business with China telecom giant Huawei Technologies, which has suppliers and customers around the world.

The company is the world’s biggest seller of equipment used in 5G telecom networks and the No. 2 seller of cellphones.

Global Impact

What does this mean for investors’ portfolios? If your investments have significant exposure to China, it may be time for a rethink. The Wall Street Journal recently posted a useful analysis of how the trade fight has played out in markets so far in May.

So far, Chinese markets have taken a bigger overall hit than the US.

What’s more, global investors are pulling back on their purchases of Chinese stocks traded in Shanghai and Shenzhen.

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Tech Pain

Within the US, the technology, materials and consumer discretionary sectors have taken the biggest hits since the escalation of the US-China trade war in May.

And even high-flying tech stocks like Apple (AAPL), Alphabet (GOOGL) and Qualcomm (QCOM) have taken a hit.

Takeaway

It’s hard to see a quick and easy resolution to the US-China standoff. In my view, investors need to stay vigilant and take a hard look at their portfolios for exposure to China.

This material is from Interactive Advisors Asset Management and is being posted with Interactive Advisor Asset Management’s permission. The views expressed in this material are solely those of the author and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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Xavier Brenner

Xavier Brenner has covered global market, business and economic trends since 2013 for Interactive Advisors, a robo-advisor offering actively and passively managed portfolios and a division of the Interactive Brokers Group.

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