President Trump gave stock traders a serious case of indigestion when he said he was going to put tariffs on $60 billion worth of Chinese products. And it wasn’t just stock traders who felt the blow of Trumpism at its finest. Investors took Trump’s tariff message as a sign he was going to show the Chinese that Americans can live without cheap toys and plastic shoes. And that sent investors into a state where panic and fear rule.
But there’s good news as March 2018 comes to end, according to a Reuters article. U.S. Stock futures jumped before the opening bell on Monday, March 26th. It appears China and the United States are going to negotiate their trade differences. Seventy percent of America’s trade deficit comes from America’s love for cheap China products. Treasury Secretary Steve Mnuchin is on his way to China to explain Trump’s tariff message, and he hopes he can convince the Chinese that Trump is just waving his tariff sword instead of using it. Trump’s recent tariff on steel and aluminum lost some of its sting when the embattled President gave Canada and Mexico a tariff exemption. Canada and Mexico produce most of the steel and aluminum that the U.S. uses for various products.
Mr. Trump doesn’t want to give the Chinese a free pass. But he does want to level the playing field, according to the Reuters article. A trade war with China is not in the best interest of American consumers, according to some economists. Inflation is back, and a trade war could give inflation the boost it needs to make consumers think twice before buying anything. And that will hurt America’s fragile economy, according to the economic experts.
Another reason for the optimism is, South Korea got an exemption from the steel tariffs. That means the Trump administration knows it is playing with fire if Chinese tariffs become a reality. But even though there are signs that Trump’s massive tariff plan is more bark than bite, there is always the possibility that Trump will change his mind. He may go after China just to prove his point and to satisfy his base supporters. It’s all about White House showmanship these days. No one is sure what is real and what is fake until all the smoke clears, and the celebrity president comes back to the current reality. That reality is, tariffs hurt American consumers as much or more than the countries that are tariff targets.