The newest information about the trade war seems to state that the Chinese are in trouble and the United States is ready to declare a victory. However, many analysts claim otherwise, saying the December “ceasefire” only gives China more time as the real issues still go unaddressed.
According to Seeking Alpha‘s John Engle, the trade war is far from over. The December “ceasefire” has provided China with some breathing room and Trump with a totemic victory, but the real issues remain unaddressed. Additionally, there is no guarantee that we (the United States) will win. If anything, China may now have the upper hand. The continuation of the trade war will continue to inject uncertainty into already quite volatile financial markets. A resolution, even marginally in China’s favor, could well lead to a return to relative normalcy.
If the trade war continues to drag on, or if it intensifies at all, investors will suffer on both sides and markets around the globe will continue to suffer. Any sign of serious escalation, or of either side digging in its heels for a knock-down drag-out fight, investors would be wise to consider looking for safe-harbor investments to see them through the storm. There have already been some harsh lessons the American public is having to deal with thanks to the trade war, and if this bleeds heavily into global markets, the entire world could be caught in the middle.
As the United States’ economy continues to undergo strain from all aspects (debt, tariffs, regulations) a prolonged and intensified trade war looks to be the proverbial straw that could break the camel’s back. The trade war’s underlying disputes remain largely unchanged and as long as China can keep the uneasy peace, or even prevent more than modest intensification, it should be able to weather the Trump storm and withstand the sustained winds of rhetoric.