“The combination of trade war fears and uncertainty over Federal Reserve interest rate hikes played a large part in the recent Q4 market sell-off.”
Despite a seemingly endless barrage of tough rhetoric and an escalating war of protectionist trade policies and tariffs, the U.S. trade deficit with China soared from $375 billion in 2017 to $419 billion in 2018 (a 12 percent increase), according to recent U.S. Census Bureau data. U.S. exports to China fell from $130 billion in 2017 to $120 billion in 2018, while over the same period imports from China increased from $505 billion to $540 billion.
The combination of trade war fears and uncertainty over Federal Reserve interest rate hikes played a large part in the recent Q4 market sell-off. It’s only natural to ask, What will this mean for the markets going forward?
Trade Deficits Are Not Necessarily Bad
Sure, when the U.S. runs a trade deficit, it shows that our manufacturing sector isn’t what it once was, and deficits
Trade data is also exceedingly difficult to measure with any true accuracy. Consider that a high-tech product from a U.S. company that’s designed, engineered and marketed in the U.S., using components from both U.S. and European manufacturers that
A Positive Outlook
While the uncertainty surrounding the ongoing U.S.–China trade dispute has caused volatility at home, the repercussions on emerging-market stocks (particularly China’s) have been far more severe. When the uncertainty
The current administration may be intent on slashing the trade deficit, but without a massive move back toward a manufacturing economy—coupled with a significant drop in American consumer spending, which typically only happens mid-recession—it’s a nearly impossible goal. But since trade, by definition, is nothing more than a willing exchange between two parties who both
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