Home Tariff Talks Stocks Fall as Trade War Fears Increase

Stocks Fall as Trade War Fears Increase

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Trade War

President Trump is determined to lower the trade gap between the United States and China. Over the past few months, he has increased tariffs on various Chinese products. The duties are designed to increase sales of products manufactured in the United States.

Some companies are worried about higher costs. Others are worried about a trade war between the United States and China. China has already announced higher tariffs on various agriculture products from the United States. Some farmers are worried about a massive crop surplus that reduces prices in the coming months.

New Tariffs

The new tariffs recently announced are focused on products like steel and aluminum. The steel industry in the United States has been decimated over the past few decades. Millions of people left the industry to focus on other industries. Companies in the United States cannot compete with lower steel prices in China.

When news of the tariffs was announced, steel companies benefited from higher stock prices. Some investing experts believe this increase is only temporary. If steel companies do not see higher demand after the tariffs are enacted, the stock prices will plummet.

Farming

Farmers are worried about retaliatory tariffs from China. China imports billions of dollars in agriculture products each year. Soybeans are part of the new tariffs from China. Soybean farmers may have to deal with a huge surplus of soybeans. A massive surplus will cause prices to fall drastically.

Farming requires a massive investment of both capital and land. Most farmers have enormous amounts of debt, and any disruption in income can result in financial failure for farmers.

Next Steps for the United States

It is clear that the United States is going to focus on increasing sales of American products. Although these new policies will benefit some companies, other business leaders are worried about paying higher prices for various products. Many consumers will end up paying higher retail prices as well.

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