All the Market Needs Is a Trade War Truce
High on my list of New Year’s wishes would be the gift of a lasting trade peace between the U.S. and China.
That’s because the ongoing two-year-long trade war between the world’s two economic superpowers has triggered sharp volatility in financial markets and cost the global economy a bundle in lost trade and slower economic growth.
In the recent phase 1 deal, where details remain sketchy, the White House claims that China will go on a $200 billion shopping spree buying American goods. This includes things ranging from airplanes to pork chops.
I hope the shopping starts soon.
But the economic reality is that such a large spending spree still may not make up for the economic cost of the trade war already.
According to economists, the trade war has already cost the U.S. economy about 0.5% in lost GDP in 2019 alone. This will be even higher next year if tariffs remain in place.
Now, that fraction may not sound like much to you, but in a $20 trillion economy, you’re talking about more than $100 billion in lost output and that can rise to $300 billion in 2020 if there is no lasting resolution!
That’s why all I want for the new year is a trade war truce.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch