Eugene Securities analyzed on the 21st that while there was a 90-day reciprocal tariff exemption effect from U.S. President Donald Trump, negotiations between the U.S. and China are necessary for a stock market rebound. However, it is expected that additional recovery in the stock market will take time, as China is not anticipated to be proactive in negotiations with the U.S.

On Apr. 2, Donald Trump, the President of the United States, is presenting the '2025 National Trade Barriers Report' published by the Office of the United States Trade Representative (USTR) while announcing country-specific tariffs in the Rose Garden of the White House in Washington D.C. /Courtesy of Reuters

The Trump administration noted that there has been progress in negotiations with trading partners such as Japan, but there were limitations to the stock price recovery attempts that occurred after the announcement of the reciprocal tariff exemption on the 10th. The KOSPI index held up well, but has yet to rise to the level prior to the 2nd of this month. Eugene Securities emphasized that further recovery of stock prices requires negotiations between the U.S. and China.

Heo Jae-hwan, a researcher at Eugene Securities, said, "President Trump is optimistic about the outlook for negotiations with China, but the likelihood of China rushing into negotiations is low." This is because, in terms of alternatives, China has more leeway with high tariffs than the U.S. The share of Chinese imports in clothing, furniture, and electronics used by American consumers exceeds 20-30%. Finding substitutes takes time.

On the other hand, most of the agricultural products imported by China from the U.S. can be substituted through countries like Brazil. Additionally, the correlation between the financial markets of the U.S. and China has decreased since 2018.

Heo noted, "What is important is the rebound of the stock market, and since the reciprocal tariff exemption, U.S. stocks in essential consumer goods and utilities sectors have been strong," adding, "Only Palantir among U.S. tech stocks has rebounded strongly." In the domestic stock market, the recovery of stock prices in key export sectors such as automotive, steel, and semiconductors is minimal.

He went on to say, "With strong stock prices in shipbuilding, machinery, defense industries, and essential consumer goods, utilities, as well as several individual KOSDAQ companies, the stock market has not escaped the influence of tariffs," stating, "A defensive strategy is necessary."

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