US-China Relations & More Polling Data/Betting Odds

Over Labor Day Weekend we caught a pair of hawkish headlines from President Trump and Democratic-Nominee Joe Biden regarding the US’s relationship with China. As we are three weeks away from the first Presidential debate, and anti-China sentiment is peaking, this may be the first of many headlines. We are still in the camp that a Trump win
is less favorable on China relations vs Biden, as Biden is more focused on bringing supply chains back to the US vs tariffs. Either way, China is not out of the woods.

President Trump

President Trump originally campaigned on being “tough on China” and has escalated and deescalated US-China
relations through various cycles of a tariff war. As we noted last week, President Trump has campaigned on creating tax credits to bring jobs back to the US and adding tariffs against countries where US jobs are being lost. Over Labor Day Weekend, President Trump stated, “If [US Companies] can’t do it here, then let them pay a big tax to build it someplace else and send it into our country”.1

Democratic Nominee Joe Biden

During Joe Biden’s tenure as a Delaware Senator, he was welcoming to open trade with China, provided they “played
by the rules”. Anecdotally, the Biden campaign has not condemned China in the same manner as President Trump. While Mr. Biden has not stated whether he would remove tariffs against China if elected into office, his stance is notably more dovish in general. While the Biden administration may still take a tough stance with China, it may seek cooperation with them on potentially more agreeable issues, like climate change.

Election Scenarios

In Early August we covered the three expected election scenario outcomes. We wanted to share the winners and
losers again along with another consideration… a Republican sweep (“Red Wave”).

#1 Status Quo (Trump wins Presidency/Congress remains divided)

#2 Democratic Sweep (“Blue Wave”)

#3 Joe Biden Wins, Congress Divided

#4 Republican Sweep (“Red Wave”)

This scenario is very out of consensus, with the largest obstacle being the Republicans taking the House of
Representatives. Through September 8th, PredictIt places the Republican odds at taking the House at 18%.2. The winners and losers would be similar to the Status Quo scenario, with a wider range of outcomes to the upside or downside.

Bi-Partisan View on China

Both candidates can garner support with anti-China rhetoric, as both political parties have a negative view of the
Asia-Pacific superpower. The chart below measures the percentage of Americans who have a favorable or unfavorable
view of China.3 Unfavorable views are at their highest level in the 15-year survey. This is a bi-partisan view, with 83%
of Republican respondents logging an unfavorable view of China while 68% of Democrats said the same.

It has been a challenge for market participants to follow the headlines and determine where to act. We have
witnessed significant volatility in the US-China relationship over the past 12-24 months, from tariffs on over $250
billion of goods to a negotiated phase one trade deal. We believe it is prudent to know the areas where you may be
more exposed to US-China trade volatility. Industries we see as more exposed include:
• Agricultural exporters to China
• Automotive original equipment manufactures
• Heavy equipment/machinery importers
• Retailers (importing raw materials from China/luxury goods sold to China)
• Semiconductors
• Tech hardware

Polling Data & Betting Odds

We wanted to showcase both the polling data and betting odds. Betting odds is a more responsive, volatile measure as
you will see below.4 Polling data receives answers directly from voters, and Real Clear Politics aggregates the many of
polls across the US to derive their composite polling number.5 Biden continues to hold a 7-8% lead in the polls and the
gap has narrowed, albeit less so relative to the betting odds. Recall Hilary Clinton had a 3.2% lead going into election
night in 2016. We will keep you updated as the election season progresses.


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please reach out to us at businessdevelopment@hightoweradvisors.com.

1Source: Bloomberg. “Trump Vows to Sharply Scale Back U.S.-China Economic Ties”, September 7, 2020.
2Source: Bloomberg, PredictIt.
3Source: Pew Research. “Americans Fault China for Its Role in the Spread of COVID-19”, July 30, 2020.
Note: Chart excludes “Undecided” opinions.
4Source: Real Clear Politics.
5Source: Real Clear Politics.
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This document was created for informational purposes only; the opinions expressed are solely those of the author, and do not represent those of Hightower Advisors, LLC or any of its affiliates.