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Trade Troubles & China | USMR Market Insights

us and Chinese import cargo crates crashing into one another
May 17, 2019

U.S. trade talks with China have been escalating dramatically and many are worried about the possible economic meltdown that could take place as a result of the trade disagreements.

Trade Troubles & China- Video Transcription

coy wells:                            00:01

The US economy could fall into a recession if the country's trade war keeps escalating. As Wall Street reels from the shock of a trade war exploding to new heights in the form of tariffs and counter tariffs, there's another reality that is setting in. China seems happy to walk away from the trade talks. Higher U.S. tariffs on Chinese goods will become the headwind for corporate earnings as companies struggle to offset the negative effect of those levies on their bottom lines. If the US puts tariffs on the rest of China's imports, there could be especially dire consequences. Trump told reporters that at the White House on Monday that if he has not made the decision on whether to put tariffs on the additional 325 billion in Chinese goods as of yet. Given other cost pressures and stubbornly low inflation right now, companies may not be able to fully off set the tariff cost, through rising prices or through the cost of effectiveness elsewhere meaning tariffs will press on margins in the case of a 25% tariff on all Chinese exports to the U.S.

coy wells:                            01:05

We are inclined to think this has the potential to tip the U.S. economy into a recession given the cost issues on companies who are already dealing with the crisis. Take note, at the same time, the U.S. added an additional 325 on tariffs. China has retaliated and hiked tariffs on additional 60 billion worth of U.S. products at the same time. Chinese levies mainly targeted U.S. agricultural goods like beef and peanuts. Currently the S&P and the Dow Jones industrial average posted their worst day since January 3rd, while the Nasdaq composite had its biggest one day fall of the year of 2019. The one thing that is not being discussed and will most likely come up in the future is the leveraging power China has over the United States in regards to the amount of treasury bonds that China currently holds.

coy wells:                            01:57

To get more information, you can get U.S. Money Reserve's, latest report ‘in debt and out of time'. It has a lot of great information as to how we got into this situation, where we are and what can happen and should our current situation lead to a default or a recession. To get a copy, click on the link below or call the number on your screen. If you liked the information today, please like and share this video. And if you're watching us from YouTube, please subscribe so you don't miss a single episode. I'm U.S. Money Reserve's Coy Wells and as always, thank you for watching Market Insights.

 

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