A survey by investment companies AmCham China and AmCham Shanghai found that 52.1% of U.S. companies operating in China have seen an increase in non-tariff barriers to their business operations. The biggest problems reported were increased inspections (27.1%), slower customers clearance (23.1%), and increased bureaucratic and regulatory oversight (19.2%.)
The Chinese government has warned that it has tools other than tariffs to use in responding to higher U.S. tariffs on Chinese exports.
Maybe numbers like these should temper current market sentiment that the U.S.-China trade war is no big deal.
Trade deficits between countries can be handled in many ways; delicate, gentle back-and-forth, respectful negotiations, stern, forceful and heavy handed but should always be worked on with diplomacy. Both sides have valid reasons for their stance and policies. And while its clear that China has been stubborn for decades, a softer approach, including items that have the lightest impact to the US should be a slower starting point. As it is now, unless our POTUS reverses his bullying tactics, China cannot save face with their people. It has now become a self-fulfilling prophecy.
And because of that, the majority of the effect on us will not involve lots of extra jobs. The employable are mostly already working. The biggest impact will be a reach into our pockets, that eventually causing us to slow our domestic spending, and slowing the economy.
When that happens the Fed will take a back seat to raising rates, the work will be done for them. Then the loss of jobs will return and our 401k’s will lose some value.
Don’t panic, but take a good look, don’t put it off, set an appointment with your advisor, or get on, and discuss this sooner not later.
Or you can pray for Trump’s behavior to change. What do you think is your safest bet? Remember, China has other ways as Jim has stated.