What is the US-CHINA trade war?

With the speech of his presidential nomination, America First, President Donald Trump has been announcing tariffs on products imported from China. The main objective is to hinder the arrival of Chinese products in the US to protect US producers and increase domestic production. However, the Chinese government has reacted to these announcements with retaliation, as well as imposing tariffs on US products.

Retaliation

After Trump announced a 10 percent tariff on $ 300 billion in Chinese products, China announced a suspension of US farm purchases, devalued its currency to its lowest levels since 2009, at around 7.15 yuan per dollar, and also announced rates of 5 to 10 percent on $ 75 billion in US products. The dispute has continued and the US currently intends to tax $ 550 billion on Chinese products and China on $ 185 billion on American products.

World Panorama

With these uncertainties, investors are likely to seek safer alternatives to profitability, thus indices of world stock markets begin to retreat. Tariffs imposed on the US-China trade war are already promoting slow global growth and are concerning many agencies, the Fed, for example, has taken note that willl continue monitoring economic impacts to decide the direction of interest rate.

SCenarios

No agreement: If the US chooses to maintain taxation on all Chinese products, and in the worst-case scenario imposes 25% tariffs, the main consequence would be a considerable drop in both countries’ economic output. This would have a strong global impact, potentially leading the global economy going into recession by 2020. Emerging countries could have their currencies experiencing sharp lows, the Fed cutting interest rates in the US and global GDP slowing in growth.

 

S&P 500 index returning to the 2,125.00 Points region.

 

Gold rising sharply, trading in the 1,700.00 region.

By agreement: With a positive outlook and cancellation of trade rates, investors are expected to keep their current investments, emerging countries outperform, the dollar weaken against other currencies, US and China economic output consolidates weaker growth and world GDP has stronger growth.

 

S&P 500 index continues its bullish movement

 

Gold with stable values and slight rise in prices.

 

Present

On November 7th, both countries agreed to reverse phased product tariffs. This would be done simultaneously and in equal proportions in a “phase 1” agreement.

However, on the November 8th, President Trump appeared to contradict his trade representatives, saying that he would not do a complete reversal rates. Making uncertain the chances of a trade deal later this year.