Tariff War Continues to be a Threat – Stock Market Volatility Remains

April 4, 2018
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The stock market was seen as one of the best places to invest throughout 2017 and into the first month of 2018, however, high volatility and tariff war from February onwards has led to reduced investor confidence as prices have slid. There are still gains to be made and some investors are still better off, but there is caution advised for anyone who wants to start investing in the second quarter of this year.

Things Could Get Worse as a Tariff  War Looms with China

Despite both China and the US stating willingness to engage in talks to avert a trade war, the news coming on of Washington and Beijing tells a different story.

On Tuesday the White House released a list of over 1000 exports from China that could be targeted with tariffs in the future. The Trump Administration has stated that these tariffs would offset the unfair trade deficit, while also punishing China for intellectual property theft that includes the unauthorized use of patents, software, and other technology.

The security of trade secrets and intellectual property has been seen as an issue for some time, particularly as Chinese companies have direct access to proprietary information through manufacturing companies that produce US-designed electronics and other goods.

The White House has said that special tariffs would be applied to artificial teeth, aerospace and marine equipment, machines used in the dairy industry, cranes, television electronics, and medical supplies. The tariffs would impact billions of dollars’ worth of trade between the two nations.

China has condemned the announcement, with the Embassy in the United States saying that the country “condemns” and “opposes” the proposed tariffs. The Embassy also said that the country would take “corresponding measures of equal scale and strength against U.S. products.”

The White House will hold a public forum with businesses next month, providing more information on tariffs and the course of action that the government will take against China.

A number of companies in the US fear that continued tariff war will negatively impact them, with tech companies and agricultural companies being some of the most vocal.

How Did the Market React?

The stock market futures took a dive by up to 1.5% on NASDAQ, Dow Jones, and S&P 500 future predictions. Investors are again losing confidence and this could lead to even more volatility in the market. However, Tuesday did end with market’s slightly up on real time figures, with the Dow up 1.7%, the NASDAQ gaining 1%. And the S&P 500 up 1.3%. Note that stock futures are only a prediction, which is why it’s important to stay up to date with current events that can impact real-time market value.

New investors are advised to watch the market closely and choose investments wisely. Specific areas including agriculture have dropped sharply, and even some of the more resilient companies like Boeing (NYSE: BA) have taken hits to value in the past two days.

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