Conflicting signals from the Trump administration over proposed restrictions on foreign investment in US technology companies, along with news that recently imposed import tariffs are starting to disrupt supply chains, sent global stock markets tumbling on Monday. Proposed restrictions on foreign investment in US technology would not just be confined to China, according to US Treasury Secretary Steven Mnuchin. The forthcoming restrictions would apply “to all countries that are trying to steal our technology,” he said. The US Treasury is due to issue its recommendations on Chinese investment restrictions on Friday. Late Monday White House trade and manufacturing adviser Peter Navarro sought to downplay Mnuchin’s remarks, telling CNBC television that the restrictions on investments in US technology companies would just target China. Benchmark Wall Street stock indexes suffered their worst losses in two months on Monday, while safe haven Treasury debt yields fell. US technology stocks were worst hit. Alphabet, the parent of Google, fell 2.6 percent, Apple lost 2.75 percent, and Amazon dropped 3.0 percent. Tariffs Impact Supply Chains The recent imposition of import tariffs by the US, and counter-measures by other countries, are also starting to affect global production and supply chains. Some US steel and aluminium tariffs went into effect in April and additional tariffs begin in July. Harley-Davidson, the dominant player in the US motorcycle market said on Monday it would not pass on the cost of EU tariffs to customers and instead focus on shifting some US production to other countries. Harley shares closed down 5.0 percent and analysts cut their profit forecasts on concerns about how quickly the company would be able to adapt to the 25 percent import duties the European Union began charging on June 22. Other companies likely to feel the impact of recent US tariffs on imported steel which raise costs for manufacturers, and the counter-measures by China which may hit US exports, include heavy machinery maker Caterpillar and aircraft maker Boeing. Caterpillar stock lost 3.7 percent and Boeing fell 7.7 percent on Monday. Trump Administration Divisions The conflicting signals on trade policy from the Trump administration reflect deep divisions among policymakers over how hard to push China on demands for changes in trade, technology transfers, and industrial policies. US Treasury Secretary Mnuchin has been reluctant to back steep tariffs on Chinese goods, fearing the impact on global supply chains. Goods assembled and exported in one country often depend on components manufactured in another, after being designed in yet a third country, making the national trade deficit focused on by President Trump an unreliable guide. Last month, Mnuchin said a trade war with China was “on hold” after officials of the world’s two largest economies held talks in Beijing that were focused on opening more sectors of China’s economy and increasing purchases of American goods. But trade policy advisor Navarro, the administration’s harshest China critic, has advocated a far more confrontational approach with Beijing. “The market is perceiving that politics will become policy,” said Brian Battle of Performance Trust Capital Partners in Chicago. “The market is starting to price in that the tariffs will start to become real. The rhetoric is getting stronger rather than weaker.” Published in Daily Times, June 27th 2018.