Our Insights

november 2019 – 3 in 3

This month, Jason Weaver discusses U.S. and China trade dispute, tariff impact and business and consumer spending.

U.S. China Trade Dispute

In 2018, President Trump started imposing tariffs on China. The goal was to right some of the “unfair trade practices” such as growing trade deficit, theft of intellectual property and forced transfer of American technology in China. Since 2018, the countries have been going back and forth. The stock market has been very volatile based on the news coming out of the U.S. and China.

The volatility started with the steel import tariff in 2018. Every time we get good news, you can see the stock market goes up, but when there is bad news, the stock market responds negatively. Today, we have good news that there is potential for a phase one resolution to the conflict. The stock market is hitting all time highs based on that optimism. However, we might get in to 2020 before there is any real resolution.

Tariff Impact

The total U.S. tariffs applied exclusively to Chinese goods is $550 billion. The total Chinese tariffs applied exclusively to U.S. goods is $185 billion. The U.S. Tariffs on Chinese products and the number of goods they cover are constantly changing. According to Goldman Sachs, the U.S. has benefited in terms of new trade, but both sides suffered in terms of real income, financial conditions and trade-policy uncertainty.

Consumer Spending

The U.S. consumer has not really been impacted by the tariffs and we are forecasting retail sales and consumer spending to continue to rise. But businesses on the other hand (because of that uncertainty) are not making investments in capital expenditures. This can potentially hurt productivity in the future.

november 2019 – 3 in 3

thank you again for joining us for 3 in 3