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Published On: Wed, Jun 27th, 2018

Trump’s Tit-for-Tat Trade War Pushes Allies Toward China

Although currently only embroiled in a tit-for-tat trade war with China, global business and financial experts at CNBC report the trade war is cause for major concern with the United State’s faithful Canadian and European Union allies. Why Trump continues to insist on outright enraging the nation’s long-time friends remains up for debate, but one thing is certain, it has alienated the U.S. from the global stage at dizzying rates. Perhaps this is what the president-elect wants; it’s a shame neither he nor the Republican Party can see the inevitable and long-term damage this will cause.

Chinese flag, Beijing, China. 2009 Photo/Daderot

Growing Concern Amongst Top CFOs

Business leaders throughout the world continue to express grave concern over Trump’s actions. According to a quarterly survey conducted by CNBC, the United States’ trade policy is the number one concern among most chief financial officers. Two-thirds of the CFOs in North America and in the Asia-Pacific region believe Trump’s policy will cause significant economic damage within the next six months.

For Trump supporters, this might be a hard pill to swallow. After all, many still cling to the “Make America Great Again” slogan without understanding fully the damage it will cause to the U.S. economy. No country can be insular in a global economic market. It really is that simple, yet some people still support the ideology of a man bent on locking the U.S. away from the rest of the world.

photo Kai Stachowiak

The Proof Is in the Markets

World history supports this. After all, do the great civilizations of Ancient Rome and Egypt still exist? For those not interested in the past, however, a simple look at today’s global markets suggests it is the CFOs telling the truth and not the president. The Dow Jones Industrial Average has tanked big 16 times this year, and seven of those 16 declines were attributed to concerns over Donald Trump and trade.

Overall, the Dow has experienced moves of over 1 percent 35 times in 2018, and CNBC analysis confirms that 12 of those negative moves were also related to trade news. When you take into account the Dow Jones Industrial Average is made up of stock for 30 of the United States’ largest corporations, including Apple, Boeing, Coca-Cola, Johnson & Johnson, McDonald’s, Nike, Visa, and Walmart among others, it’s hard to see how downturns related to trade wars “Make America Great Again.”

It isn’t just the Dow, though. Blue-chip index investments have also experienced a roller-coaster ride throughout the tit-for-tat trade tariffs. The index includes the DJIA, alongside other Dow Jones’ indices, as well as the CAC 40 Index, the Deutcher Aktien IndeX 30, Standard & Poor’s 500 and ASX 20 indices, and India’s Mumbai Stock Exchange SENSEX.

CNBC reports that the escalating trade tensions has “shaved $700 billion in market cap off the index,” which is an amount no one can or should ignore. This makes trade the biggest risk for national and international corporations, and is a primary reason why CFOs are expressing such grave concern. Global trade directly influences external business success, and the markets show the stress.

Treading Water

Many global business and government leaders are taking steps to mitigate the trade tension damage. Sjamsul Nursalim, a global investor who has made billions in coal, retail, and real estate, is focusing on the latter. Although there is an underlying concern on how a trade war will affect real estate, i.e. you need building materials for development, Nursalim has holdings in a Singapore development company independent from the escalating trade war between the U.S. and China.

China has reached out to the European Union and vice versa to give Trump exactly what he wants: solitude. On June 25, 2018, China and the EU met and agreed to update global trade rules. While this will include work toward subsidies and technology, the group to be formed will also focus on the preservation of “support for international trade amid U.S. threats of import controls,” per The Daily Times. The EU is in particular support of protecting the “global system of regulating free trade.”

Should the U.S. continue its assault on China and its allies, it’s safe to say it might not be included in this forum, which won’t bode well for the country. Yes, the U.S. must protect its rights, especially in China where patents and trademarks are abused on a daily basis. Nonetheless, the U.S. cannot stand on its own without the support of China and the EU, because too many U.S. businesses are invested in global imports and exports. Even most Republican congresspersons think Trump’s trade war is a bad idea.

Not everyone is running to the streets like Chicken Little, however. CNBC also explains that Trump’s tax cuts will keep at least America’s richest corporate leaders rich. Firms who opt to take the cuts shouldn’t suffer from the trade tensions. So, yes, Trump is making America great again – that infamous 1 percent of America. The other 99 percent? Ask the employees who were laid off from Harley-Davidson plant closures and GE, who is slated for DJIA removal soon.

photo/ Mary Pahlke via pixabay

About the Author

- Veselina Dzhingarova has long experience in internet marketing and SEO. She is passionate about blogging to share her expertise. Veselina is a regular contributor at many other online publishers like chamberofcommerce.com, marketoracle.co.uk, newswire.net, bizcommunity.com, socialnomics.net and more. She is the co-founder of Financia­ltipsor.co­m, cryptoe­xt.com, Bl­ogforweb.c­om, Techsu­rprise.com­, travelti­psor.com a­nd others.­ You can get in touch with her on LinkedIn , Google+ or at [email protected]

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