Thanks to tumultuous tariffs, Chinese investment in the US dropped 92% in the first half of 2018 — reshaping trade across the globe.
The “trade war” between the US and China has been largely bluster so far — but recent escalations have affected everything from global stock markets to Harley-Davidson production.
The trade troubles intensified yesterday when Trump announced plans to restrict Chinese investment. The plans, expected to be further detailed this week, ban companies with 25% Chinese ownership from investing in the US and also restrict US exports.
After the announcement, the Dow fell 1.33%, the S&P dropped 1.37%, the Nasdaq dropped 2.1% — and tech and auto industries across the globe tumbled.
In response, China’s central bank released $107B from its reserves to help jump-start the economy before American tariffs (which will impact $34B of China’s US exports) go into effect.
Meanwhile, China launched an ambitious plan, “Made in China 2025,” to establish Chinese tech dominance — and President Trump has threatened to up tariffs on China to $450B to foil the program, which he calls unfair.
The EU has already launched a retaliatory tariff — forcing US motorcycle company Harley-Davidson to move production of some of its motorcycles to Europe.
Harley-Davidson’s production shift was immediate, but other companies will lose contracts slowly — Boeing is already expected to lose an $18B Chinese contract it had been negotiating.
China has also vowed to match US tariffs dollar-for-dollar if Trump follows through with his jabs — so get ready to pay more for everything from cordless drills to Christmas lights as the international bickering continues.