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Tariffs, Trade and the Ultimate Goal with Agreements with China

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It is clear that any perceived direction of the trade talks or tweets from the President regarding tariffs are market movers. No one, with the exception of a few insiders, really knows the true status of the ongoing negotiations between the U.S. and China.

But, what we do know is that one way or another trade will continue whether it is under agreeable terms that benefit both countries or at odds but still provides continued growth, albeit slow. Both the U.S. and China can benefit from a solid deal and it appears one will be found as some of the points of contention seem to be logistical details the U.S. wants such as transparency and change to the rule of law in China, while others are more intrinsic like the ability for the U.S. to impose tariffs later should China renege on their side of the deal. China’s are more simplistic in that they simply want the tariffs removed in hopes of repairing their floundering economy. Trump and the U.S. are certainly negotiating from a position of strength.

Wherever the trade talks land, the U.S. economy is on solid footing and the market’s reaction over the last few days should be short-lived and we do not expect them to be a continued trend. Having said that, the next couple of weeks may be volatile as we see if the new tariffs will stall the talks scheduled for the end of this week and we urge you to maintain your long term outlook and focus on the many strong points found in our economy: a rebounded 1st Quarter GDP, growth coming in at about 3.2%, and continued falling unemployment as well as an additional 263,000 new jobs.

There are several articles as well as opinion pieces that can be found in the Wall Street Journal regarding the tariffs and trade talks that we would refer you to for more detailed information.

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Monday, 26 October 2020

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