2019-05-09 US China trade war re-ignited
Last Sunday, Trump announced that US will impose 25% to 200bn of imported Chinese goods by Friday if trade deal is not made. This comes with a surprise.
Today is Thu, and it is a critical day. China Vice-Premier is taking flight to US. If there is no deal made by tomorrow, the tariff will be imposed. What can happen?
1. US can delay as the talk restarted towards their direction.
2. US can impose 25% tariff partially on certain goods (means less than 200bn) as the starting
3. US can go forward to walk the talk and impose full 25% tariff. However going this option means China will likely retaliate.
What is the worse case if nr 3 happens? The cost of imported China goods will increase price by 15%. Consumer can still choose to pay for high priced goods, or they can choose to turn into US goods. How much can local produced goods able to supply for the demand? When US goods are not able to supply sufficiently, price will increase and they might continue to buy China goods as it becomes cheaper, or consumer can turn to goods that produced from other country. It make China and US in lose-lose situation. In anyway, the inflation may go up. FED has to make decision whether it want to reduce the interest rate.
How about the US companies? They may get slight increase of local sales, but at the same time export to China market will be impacted. Or it could be different company being impacted (e.g. tech vs agriculture). US company will report lower performance in coming quarter or year.
Today is Thu, and it is a critical day. China Vice-Premier is taking flight to US. If there is no deal made by tomorrow, the tariff will be imposed. What can happen?
1. US can delay as the talk restarted towards their direction.
2. US can impose 25% tariff partially on certain goods (means less than 200bn) as the starting
3. US can go forward to walk the talk and impose full 25% tariff. However going this option means China will likely retaliate.
What is the worse case if nr 3 happens? The cost of imported China goods will increase price by 15%. Consumer can still choose to pay for high priced goods, or they can choose to turn into US goods. How much can local produced goods able to supply for the demand? When US goods are not able to supply sufficiently, price will increase and they might continue to buy China goods as it becomes cheaper, or consumer can turn to goods that produced from other country. It make China and US in lose-lose situation. In anyway, the inflation may go up. FED has to make decision whether it want to reduce the interest rate.
How about the US companies? They may get slight increase of local sales, but at the same time export to China market will be impacted. Or it could be different company being impacted (e.g. tech vs agriculture). US company will report lower performance in coming quarter or year.
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