What stocks (Apple? Starbucks?) are on the front line in any trade war?

Three things to think about as an investor ponders the possibility that the United States will provoke a trade war with China, the European Union, and other countries.

First, President Trump’s move today to put 25% tariffs on imported steel and 10% tariffs on imported aluminum will certainly be challenged in international trade venues such as the World Trade Organization. Those challenges will at least provide talking time for a solution short of a global trade crisis.

Second, countries that decide to retaliate don’t have to/aren’t likely to target similar U.S. products as the retaliatory tariffs. For example, even before today’s action by the White House, China had launched a probe into sorghum and soybean imports from the United States.

Third, countries have a lot of ways to retaliate for the U.S. tariffs that don’t involve tariffs at all. A U.S. business in China, Starbucks (SBUX) for example, could find it harder to buy real estate, open new stores, or hire workers. The U.S. company that is, in my opinion, most vulnerable to Chinese measures that don’t include tariffs is Apple (AAPL). Apple’s supply chain is predicated on its ability to import needed parts into China or to source them there, and to then assemble its iPhones and other products in China. It would be relatively easy for the Chinese government to disrupt the workings of that supply chain by taking a hard look at labor practices at the factories of Apple’s Chinese partners or to slow the import of needed parts into China.

It is probably premature to sell the shares of vulnerable companies such as Starbucks and Apple until we see how quickly trade tensions escalate, but it is something to watch.

Chinese President Xi Jinping’s top economic adviser, Liu He, is in Washington for a visit that concludes Saturday. He is scheduled to meet with White House economic adviser Gary Cohn, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

Maybe a solution to defuse what increasingly looks like a potential trade war will emerge from these talks. Watch carefully.