Editorial: U.S.-China trade war is scary roller coaster
If you have any money in the stock market, you’re going to want to close your eyes, catch your breath and hold on tight.
The roller-coaster ride that is the daily ups and downs of trading is headed for a whole new set of death-defying loops.
We know why.
In addition to the daily vagaries of this company’s quarterly report and that one’s new product or the highly anticipated (and somewhat flat) debut of a tech superstar like Uber on the New York Stock Exchange, last week saw trade negotiations between the U.S. and China end Friday with no good news.
America increased tariffs on $200 billion of Chinese products to 25%, more than double the opening salvos that had touched off the trade war. If that wasn’t enough, another $300 billion of goods were announced as about to undergo similar treatment.
That translates to $500 billion in imports and items that had cost $100 now costing $125 — things like smartwatches and electronic devices, bike helmets and car seats.
On Monday, China issued its own list of demands in the ongoing economic hostage situation. It would raise tariffs a corresponding 25% on $60 billion on items including agricultural products, such as beef, beans, grains and oils; building materials like brick and pipes; train parts and equipment; and quarried metals, rocks and chemicals.
The stock market reacted accordingly. By 1 p.m., the Dow Jones average had fallen about 700 points. By 3 p.m., it rallied to just under a 600-point deficit. The difference between Friday and Monday on charts looked like the cardiac monitor in an intensive care unit.
And experts say it isn’t going to get better soon.
The tariffs have had some positives, like the $1 billion investment U.S. Steel announced in local plants. But those pros are balanced by cons like the fact that our trade deficit with China has only gotten worse. The tariffs don’t just hit people raising the cattle or mining the iron targeted by China or the people buying the Apple watches and Bluetooth headphones at Walmart.
They hit your kid’s college fund. Your IRA. Your parents’ savings. They pull out the stops on the roller coaster and send you on a scary ride of peaks and valleys.
No one knows how it will end, but people have to be prepared for the jolts and drops along the way, especially when making major financial decisions like retirement. Even if you make it to the end, you could end up with whiplash.