President Trump has threatened yet another round of trade tariffs on China, is this going to affect the ASX?
Market watchers had thought that the trade skirmish between US and China was going to end with the relationship seemingly improving in recent months and talks occurring between teams of the two countries.
Trump’s Trade Tariff Tirade
Using his favourite platform to communicate with the world, President Trump tweeted:
“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….”
He seems to be suggesting that the trade tariffs are a cash cow that not only are useful now but could be increased further.
With one of China’s most important politicians travelling to Washington later this week, President Trump is threatening the tariffs on China if the Asian giant does not agree to what he wants. Trying to bully the second biggest economic power in the world doesn’t seem like a great idea.
But, many economists have warned that trade war tariffs can have major negative secondary effects. Consumers end up paying higher costs, businesses can’t afford the higher cost of goods for production. Trade isn’t a zero sum game and other countries might lose out.
Australia’s success is heavily linked to global trade with many of the ASX’s large companies like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), Amcor Limited (ASX: AMC), Brambles Limited (ASX: BXB) and Macquarie Group Ltd (ASX: MQG). reliant on trade wars not hampering things.
Sell Everything?
Don’t be scared off investing, the worst case scenario doesn’t usually happen and the world keeps on getting better over the decades, but I’m being careful about picking cyclical shares like miners or banks right now (which dominate the ASX). I would prefer reliable businesses like the ones in the free report below.
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