It has been a while since my last entry due to having take a break from everything, and going all the way to Peru to see its wonders, taste its delicacies, and drink pisco sours. However, every good vacation has an end, and it’s time for this blog to shift gears and start afresh. Luckily, it seems that not reading the news for a while wasn’t a big issue as the trade war between the US and China continues to rage on.
Today, the day I start to write anew, the markets went down an average 2.29% but the tech sector saw some of its flagship stocks go down more than 5%, for example, AMZN (-5.21%), INTC (-6.07%), and NFLX (-5.10%). The reason of this slump, as most people would argue, is that when China decided to slam a 25% tariff over 128 US products, including pork, a staple for Chinese cuisine, the trade war shifted from being a possibility to something closer a reality. The only thing that this trade war needs to be a full-fledged reality is that both countries actually state it.
Furthermore, let us not forget that the markets have been in a bullish run for nearly a decade, and everything has to come to an end.
Moreover, the US tariff on steel a couple of weeks ago will have it price increasing effect reinforced as Handan, a Chinese city full of steel mills, ordered that output should be slashed by a quarter due to environmental concerns. Less supply with constant demand means higher prices. Thus, the US consumers will feel that their greenbacks are losing power.
In the end, China and US relations are deteriorating under President Jinping and President Trump watch. One is the undisputed leader, the other is the noisy chief of state. In the long run, both the Chinese and the US citizens will suffer from the trade war regardless of which leader becomes victorious.