This short article talks about the realities that the tariffs are starting to bring home.
The reality of the trade war is starting to hit home this week. No longer is it being discussed as just a negotiation ploy. The effects are real and growing. The negotiation breakdown that occurred this week shows neither party is going to give up anything to get something. Favorable negotiation results occur when both parties feel they benefit.
This is the danger of parties speaking publicly about the negotiations and using hard ball tactics. While the Chinese have been relatively controlled in their messaging about it, a lot has been said openly on the US's side which is creating more problems than solutions.
The smart companies have been making adjustments in their manufacturing and logistics for more than a year. Those who haven't been out front of this issue are going to feel the pain – just like the American consumer!
As I have said before, the US should have worked with our allies to “kick the Chinese out of the sandbox for stealing toys!” We are now in a pissing war on our own. Our original objective was to stop the stealing of intellectual property, but now it’s just becoming a brutal fight to the finish with much collateral damage.
I anticipate the investment markets are going to start scrambling for cover – many international businesses with Chinese exposure have already started the wheels moving.
Grab your hardhat and keep your eyes out for falling objects.
