Instead of worrying about worrying about problems in the “trade war” between the United States and China, we must remain vigilant and take advantage of the purchase opportunities brought about by the mini-panic attacks.
Because we are unlikely to see a full-scale trade war.
As concerns about tariffs and retaliation subsided, corporate stocks were hit, as their important business in China will recover. In fact, if we see another round of rapiers, there are still a few companies that deserve attention.
In order to implement this strategy with sufficient confidence, you need to be fairly sure that there will be no serious trade war. This is because, as Kiplinger warns, if trade wars arise, there will be real fears: “If the tariffs on Chinese goods cause the prices on the shelves of goods to rise, consumer spending will be hit. Consumers It is still the pillar of the U.S. economy. ”
Here are the seven reasons why this is most likely to happen.
#1: President Donald Trump cannot afford the pressure of the market.
The list of Trump’s formation is rather rare. However, an important achievement is to create a weird stock market rally by enhancing the confidence of investors and CEOs – especially in the small companies that create most jobs in our country. This newfound confidence may lead to a new wave of capital spending. This may help create more economic growth and increase productivity.
On the contrary, trade wars are terrible for the economy and most stocks. This makes Trump in trouble. He could not risk losing one of his greatest achievements and created many dissatisfied investors – especially entering the midterm elections, which could reverse the dominance of the Republican Party in Washington.
#2: The trade war is very unfavorable to economic growth.
Historians have made the trade war one of the main causes of the Great Depression. This is in itself one of the reasons for the Second World War. This is why the market is always shaken by trade wars – and why most experts warn Trump to avoid falling into a trade war.
#3: The Chinese are wisely targeting Trump’s mid-west voters base.
China has already threatened to impose certain tariffs on US agricultural products, and the 25% tax rate on imported soybeans is one of the most worrying possibilities. This hit the heartland – the core of the Trump voter base.
Trump knows this, and before the trade war really becomes serious, it makes him back down.
#4: Trump likes to boast and retreat.
The following is the basic game plan in Trump’s “art of trading”: start negotiations with many tough talks to ease each other and then compromise.
We have seen this already working with other countries. Trump began to talk about a wide range of tariffs on aluminum and steel, but then most of them negotiated with exporters such as South Korea and they agreed to voluntary restrictions.
#5: Americans like shopping, they prefer cheaper goods.
Trump’s goal of protecting employment through tariffs looks high. But everything needs to pay a price. Trade sanctions are subsidies for workers in protected industries because trade barriers increase the price of the goods they make by restricting competition.
Now we can buy large quantities of cheap consumer goods from Mexico, China and elsewhere – from guitars and air conditioners to dishwashers and solar panels. According to Deutsche Bank, the top three imports from China are what we use every day: mobile phones, clothing and computers. Trade tariffs on these commodities will make them more expensive. Consumers will notice that there may be a political rebound.
#6: Trade wars will disrupt the critical path for U.S. companies to conduct business.
Due to many years of open trade, the supply chains of U.S. producers are intricate and deep into Mexico, China and other regions. These companies assemble and organize parts and unfinished products on a daily basis. Interrupting these supply chains with trade wars, you are completely dissatisfied with the way you do business. American companies will not be happy. Business confidence will be weakened and Trump’s political support may also be affected.
#7: Trade war means more robots than people.
Trump wants to impose trade barriers to protect manufacturing jobs. But factories use robots more than people. According to a recent study by the University of Chicago’s Booth School of Business, increasing trade barriers means more robotic work than necessarily workers.
Money quotes: “(Trade barriers) will not reverse the general trend of manufacturing employment, which greatly undermines the choice of the labor market, especially among the less educated employees.”