China are actually the ones in the worst position, I think a deal will be made.
It feels like everyone is missing a very key piece of information:
The USA has $143.55 billion in exports and $438.95 billion in imports from China.
Everyone agrees the US consumers will be forced to pay more for products but that's nothing compared to China where millions of people will lose their jobs because their companies are going bankrupt because long term they start being undercut by a US companies who ramp up / move production.
Yes I get it, not everything can be made in the USA, but a lot can... This plastic chair I'm sitting on, this desk, this mug I'm drinking from, the radiator near me etc etc all of that stuff can be made in the USA.
The options for the USA are:
- consumers have to pay more
- more jobs are created as companies scramble to capitalise on undercutting now expensive Chinese imports.
The options for China:
- mass job loses
- mass bankruptcies
- a massive recession that will set them back decades
This is a lose lose for everyone, I agree. I also agree Trump approach is not correct. But from an investment point of view, we need to be aware China imo have more to lose.
For that reason I think in a few weeks time a deal will be made and tariffs on China will be reduced.
We are in the early phase where world leaders are publicly taking a hard stand but behind closed doors negotiations are going 24/7.