1 Nov 2019
Friday Tidbit: US China Trade War
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
The US China Trade War began on 22nd March 2018 when US President Donald Trump signed a memorandum under the Section 301 of the Trade Act of 1974 instructing the United States Trade Representative to apply tariffs of US$50 billion on Chinese goods due to Chinese theft of US intellectual property.
Theoretically the purpose of tariffs is to protect domestic business and domestic jobs but in practice everybody loses.
Interestingly, after 20 months US listed companies are posting a positive return for investors while Chinese listed company’s valuations are still negative in aggregate.
Click for chart.
Asia makes up more than half the World’s population and half of global gross domestic product (GDP) which means that China and the rest of the Asian region will not continue to under perform.
It is only a matter of time before performance bounces back and dramatically.
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