Trade War Risk Olive Branch

Published / Last Updated on 28/03/2018

Markets have recovered marginally this week as the threat of a trade war between the world’s two biggest economies, USA and China, softened a little.

The US Treasury Secretary suggesting they were ‘hopeful’ of coming to an agreement with China and the Chinese premier suggesting that they should keep talking.

The reality is we believe China needs the US more than the other way around.  China’s growing economy relies on the purchase of cheaper goods and services by the west, and we have long believed this is a natural return of wealth back to the Far East, that was exploited by the British, Europeans and North America a few centuries ago.

They both need each other and whilst President Trump is right to rally against intellectual property rights theft, with US companies having to give up and share rights with Chinese ‘partners’ when looking to trade in China, we suggest the west still likes cheap goods.  It is right though that China should let it goods and services float in an open market rather than the State protectionism that exists today.

Interesting times to follow as the big two flex their muscles. 

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