Tit-For-Tat By: Gabriel PotterMBA, AIFA® 2018.04.02

Well, everyone saw this coming.  The Trump administration announced wide-ranging tariffs on China, so China responded yesterday with tariffs on US goods.    Broad wide ranging tariffs most certainly have the potential to grind global growth to a halt, but it’s important to note what is NOT happening – there have been no outright provocations, no protests, no great cries of indignation, and  – most importantly – no escalation.  Instead, US trading partners have issued sober responses, made modest concessions and, as necessary, generated disproportionately muted retaliation to targeted tariffs.  For instance, the US tariffs on China have a greater potential impact – affecting $50 billion of Chinese goods while China’s response affects a smaller market of $3 billion dollars, mainly agricultural products like pork, fruits, and nuts.

The practical upshot is the current tariffs can slow the trajectory of growth but not derail the coordinated global growth story.  Limited damage is much better than an out-of-control trade war; we’ll just have to wait and see if this is the beginning or the end of Trump’s foray into international trade and diplomacy. 

 

 

 

 

Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

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