Investors should be cautious about demanding that China pay the higher tariff bill, CNCC's Jim Cramer says. Rather, these costs will fall on American consumers, and investors should adjust their portfolios accordingly.
"As long as President [Donald] Trump believes that the Chinese are the ones who pay the price, he will continue to take a hardline approach to these talks, which means your portfolio should have as little exposure to China as possible. Said the "Mad Money" host.
Portfolio managers have found the market to be a difficult place to trade for stocks that Wall Street sorts out the safe names and considers the earnings warnings of companies hit by the US-China trade war, Cramer said. He also announced that the current uncertainty would be the "new normal" to the world's two largest economies coming to a kind of deal.
That explains the roughly 84-point drop on the Dow Jones Industrial Average Monday, 0.67% falling on S & P 500 and 1
"Unfortunately, we have no idea when it can happen. People in this country just begin to realize that President Trump has had it with the Chinese, "Sa Cramer." He doesn't want to continue negotiating, even if they will come to the table. "
Trump's flow to the Black List China Huawei has put pressure on the US semiconductors supplying components to the telecom giant.
Since Trump's Administration's decision yesterday to prevent business with Huawei, Qualcomm shares have fallen almost 12%, Micron Technology fell more than 10% and Analog Devices more than 10%, VanEck Vectors Semiconductor ETF, a broad-based chipmaker tracking, is down to nearly 8% in the same timeframe.
"Applying American companies to say we are not is an amazing amount of pain is going to let Huawei get ahead of us during 5G. Some of these chipmakers get 5 to 10, well, even 15% of Huawei's sales, Cramer says. "This is a big deal to close them from this account."
Sunday's Google parent alphabet cut its support for Android hardware and software in Huawei phones. The move also damaged Alphabet shares, which fell more than 2% during Monday's session.
The market expects China's retaliation to target Apple, which employs more than 2 million people in the country, Cramer said. Shares in Apple threw more than 3% Monday, and the host said he can't blame investors for worrying.
WATCH: Cramer breaks down why investors should trim stocks with Chinese exposure
Note: Cramer's charitable trust owns shares of Alphabet and Apple.
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