The Trade Truce is Over…
On August 2nd President Trump took to Twitter to announce yet another new wave of tariffs. This time it will be 10% on 300 billion dollars of goods and products coming to the U.S. from China. With these new tariffs, virtually all imported Chinese goods from smartphones to apparel will be taxed. The tariffs will take effect September 1st just ahead of the next scheduled trade talks.
Chinese news organizations reported shock among Chinese trade negotiation officials and the general Chinese public. This is not the first time Chinese negotiators felt talks were beginning to make notable progress when Washington surprised them with more aggression. At this point, the Chinese seem to be confused about what the U.S. wants from a trade deal.
China responded by devaluing their national currency on August 5th. Having a weaker currency against the U.S. dollar essentially nullifies the effects that the tariffs have on U.S. importers. President Trump and the U.S. treasury have condemned this move by China as “currency manipulation.” It is worth mentioning that a currency war would be far more scary and dangerous to the global economy than a trade war.
Morgan Stanley economists issued a research document on August 5th that warned if this tit-for-tat between the U.S. and China does not end, a global recession is likely to happen within nine months. Global stock markets plunged from both Trump’s announcement and the experts’ bleak outlook.
This trade war greatly affects many of the clients we work with. Blacksmith is committed to finding solutions to the issues this conflict has created. Even if you are not a Blacksmith client, we are here to offer help and advice to product companies that have their supply chain in China. To find a solution for your product business, contact us here.