As the year end is seen by all and next year being an election year for President, tariffs rollbacks are on the horizon. There are many reasons to impose tariffs such as protect existing jobs in your home country; try to encourage companies to reinvest in your home country and fight the race to the bottom of low prices.
The President believes all those things are happening, but the reality is perhaps a handful of plants came back to the US, if they did leave China, they went to other countries in south east Asia.
In an article by Keith Bradsher and Ana Swanson of the New York Times News Service, the US and China have agreed that an initial trade deal between the 2 countries would roll back a portion of the tariffs placed on each other’s products. The deal is not finalized, but it could remove some of the the tariffs the US has put on $360 billion worth of Chinese goods. The Treasury has collected $7 billion in tariffs, up from what it typically collects.
Stocks soar on the news that some sort of deal has been reached or is within reach. The ironic aspect is manufacturing and farm states have lost sales and jobs on the tariffs, and this is suppose to be President Trump’s base of support. The trade war cover 2/3 of the products imported from China and 58% of the goods China imports from the US. A lobby group called Tariffs Hurt the Heartland or desires more free trade released a report which says US consumers and businesses have paid $38 billion in tariffs
Talks are continuing and it remains unclear when and where the two sides will sign the agreements.
Linking to dividend paying stocks, sometimes government policies help the company, sometimes they do not. All companies have to adjust and see what flexibility they have to pass on prices to their customers. Sometimes they can, sometimes margins fall and one wonders when it will be over. When you examine your investments how is your companies managing with the policy?
There are more questions than answers, till the next time – to raising questions.