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.
Tariffs turned markets upside down
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.
Panic on both side of the Pacific
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.
This may only be the beginning…
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.
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