Retire First Newsletter
May 2019 – Download Full PDF
In The Fog of Trade Wars by Doug Allan
The uncertainty of the US trade war with China is now front and center as the dominant problem currently captivating the markets. The first tariffs were announced in Jan. 2018, with a 30% tariff on solar panels and a 20% tariff on washing machines. Then in March, the USA imposed 25% tariffs on steel and 10% on aluminum. It continued to build and by the end of May it had mushroomed to 25% tariffs on $50 billion of high-tech equipment and 10% on $200 billion of other goods last winter. Last week; however, they announced that they would increase the tariffs on that $200 billion of other goods to 25%. Bringing the total tariffs so far on $250 billion of goods to 25%. This leaves a further $325 billion of other goods the USA buys from China as potentially still in play. The Chinese retaliated with a 25% tariff on pretty much everything it buys from the US or approximately $60 billion US in products that it imports. At this point they are hoping to wait this out and see if Trump will lose in the Nov. 2020 election so they can hopefully deal with a Democrat that sees things differently. It is a complicated deal and likely involves more than just trade. The heart of the issue appears to be that the Chinese require that all companies that do business in China must transfer their patented technology to a Chinese partner. This theft of intellectual data is rampant and, as far as the US is concerned, it must be stopped. Congress appears to be onside with this tough stance. At this point it would appear there will be no quick fix on this problem.
