Share markets around the world have been extremely volatile these past months especially in the last quarter amidst fears of a trade war between the Chinese and U.S.. The U.S. has been accusing China of unfair trade practices. To that end, President Trump signed a memorandum applying tariffs on some Chinese products. The Chinese have responded with sanctions on some American products.
What’s does this mean?
According to the U.S Department of Commerce, in 2017 alone, the U.S. imported about $505B worth of Chinese products against exporting about $130B worth of American goods to China. This creates a trade deficit of $375B against the U.S.. Some of the goods imported into the U.S. are, electronics (Flat screen TVs, phones, laptops), Umbrellas, Sport shoes (Sneakers), paper etc.
The trade tariffs don’t mean U.S. will stop importing from China, it only means the goods coming from China are now going to be more expensive for the U.S. buyer. The U.S. hopes that this will deter American consumers from buying "Made in China" products. But will it?
2018 has seen some volatility on the global stock markets – meaning a lot more people are feeling unsure of what may happen. The uncertainty causes instability on the markets which may cause panic. However, the U.S. is not going to stop importing from China and people aren’t going to stop buying "Made in China" products. Yes, these products may be slightly more expensive in the U.S. than they have been in the past but considerably cheaper than if they were made in the U.S..
The devil is always in the detail. It is important to note these events and understand how they may impact future economic activities. It's important not to panic and not to react without thought to everyday news. Seek advice with a professional adviser to quieten the noise and make sense of it all, relative to your long-term strategies.
General Advice Disclaimer
Note: - this article is of a general nature only and does not take into account your objectives, financial situation or needs. Please consult a qualified Financial Adviser, like Wealth Peak Financial Advice, before making any decisions on the basis of this article. Wealth Peak Financial Advice Ltd ABN: 24 615 007 326, is a Corporate Authorised Representative of Total Financial Solutions Ltd. AFSL 224954 and ABN 94 003 771 579