Trade War with China
The impending crackdown of China on U.S. goods has everyone in an uproar. Furthermore, China may decide to implement strict trade regulations, which it would make it difficult for the States business in China to have the same opportunities as now. The current balance of trade done by the United States is $330B deficit, while China shows a deficit of $550B with the world. United States trade imbalance is credited to two things. First, the Washington and policymakers; secondly, corporate America which has taken to do business overseas since the 1980s to have the advantage of cheaper labor and higher profits.
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— Ted Bauman Guru (@TedBaumanGuru) September 17, 2018
Many American companies that worked diligently for years to become situated in China are hoping Trump will not raise too much opposition from the lawmakers in China. The American companies that have strong business ties to China are looking at a $100B loss if China chooses to change its import and export policies. According to Ted Bauman, “when this sort of corporate foreign income is included, the U.S. runs sales surpluses with Mexico and Canada.” If retaliation occurs, U.S. companies will be hurt on the Dow, Nasdaq, and S&P 500. United States companies will have to deal with the impact the trade war will have on commodity prices. Again, Ted Bauman says that doing business with large U.S. multinationals is a source of concern for investors. This concern is aimed at the corporate level and not at the workers. Ted Bauman sees the tension that is created by these multinationals in China are a direct result of companies seeking a competitive edge by using China as a base for lower taxes and labor costs. According to Ted Bauman, this has made these American multinationals not only vulnerable but also their investors who now experience a ripple effect from the tension in a possible escalation in the trade war with China.
Foreign Influence on China
On the positive side, there are those large exporting companies in China, which make up about two-thirds of twenty-five of exporting companies own companies outside of China. According to Andy Rotham, a strategist for Matthews Asia, says that Trump’s import taxes will not come to fruition by China’s corporations. On the other hand, this could still turn into a trade war according to Rotham.