Impact of U.S-China Trade War on Stock Market
For the last few years, the United States and China have been involved in a severe trade war that has numerous impacts on the stock market. Recently, the majority of the United States companies have experienced drop resulting from the U.S-China trade war. As documented by researchers, the two nations have the largest economy in the world. Thus, their trade relation does not affect the individuals’ countries but affect the global economy. The challenges between the United States and China began when China joined the World Trade Organization in 2001. Influenced by its high population, China has usurped the United States as a significant supply of goods and other vital products across Europe, South America, Asia, and Africa. Based on the global demand for products in America and other European countries, there developed a severe trade imbalance between the U.S and China. Consequently, the U.S President Donald Trump kicked off a vital trade war by imposing high tariffs on imported goods from China. Chinese administration retaliated by imposing $60billion on all American products in the country.
Recently, the stock markets in the United States have been performing better than other foreign stock markets. As documented by scholars, the majority of the high generated profits are from sales outside the country. However, the case is different in other countries, such as Japan and other countries in Europe. Since the trade war began, Japan’s Nikkei 225 has increased its stock market by only 2.9%, while France’s CAC-40 only earned less than 1% within a year. As a result of the trade war between the two countries, some sectors and corporate have lagged. For example, Boeing and Honeywell only made a profit of 4.7% within a year as they are more venerable to trade war. According to experts, the trade war will negatively impact China’s stock by slowing its economic growth and weakening its currency value.
One of the main solutions to the intensified U.S China trade war is switching suppliers. The United States is one of the major European trade partners. Thus, the country can alter its economic outlook by switching their major suppliers from China to other continents such as Africa and South America. The trade war has dragged many companies backward, forcing them to switch partners to other countries with better trade policies and quality assurance on logistical networks.
Influenced by the U.S0China trade war, many industries have decided to shift their manufacturing capacity. The decision to shift manufacturing companies is tough as it is more expensive since it requires new factories and workers. Although the company may decide to localize operations in the thttps://essaygroom.com/the-u-s-market/wo countries, China and the United States have laws about the control of properties, especially for the non-citizens. Therefore, one of the solutions to manufacturing companies in the manufacturing capacity shift.
Since the trade war began a few years ago, there have been numerous efforts to resolve the problem with trade talks. Indeed, the two countries have become important trade partners, and their relationship affects international stock exchange. Thus, trade talks are essential in solving this conflict.
Among all the possible solutions to the U.S-China trade war are trade talks and negotiations. Recently, China has become the major U.S trade partner due to the importation of many manufacturing products from the country. Additionally, China has recently become a techno giant nation with advanced technology better than most other European countries. Finally, the country has the world’s highest population. Based on this high population, the country has enhanced labor leading to high production and lowered products. For that reason, China is an important trade partner not only for the United States but across the world. Thus, other than reiterating from their products, trade talks and negotiation are the essential solutions to the above trade war.