China, EU and the US - This is trade wars!

Thursday, 28th June 2018 10:53 - by Rajan Dhall

The last month or so has been a battle of the political powers over the world as the economic superpowers of the world come head to head and trade blows in the form of trade wars. Donald Trump won his election with the promise of protectionist policies vowing to 'Make America Great Again' and it seems he is giving it a good shot!.

A while back now the American president said he would look to attack China, who he feels have been taking advantage of his nation for plagiarism and stealing industry. This week Trump said he will be looking into measures to stop Chinese investments from buying into sensitive companies in his home country (mainly tech). Prior to this Trump targeted ZTE a telecommunications firm with a strong operation in the States and now even government agents are not allowed to use any ZTE products whatsoever. In fairness Trump banned ZTE after the company violated US laws by selling products to Iran and North Korea and flouted terms of an agreement it had reached to punish the company executives involved in those sales.

Kaspersky are another company that has been targeted by Donald Trump, the Russian cybersecurity firm had been accused of collecting data from American citizens and the president even went as far as signing a new legislation that bans the use of Kaspersky Lab within the U.S. government.

Just today we have seen conflicting reports that Trump will 'desist from harsh measures on Chinese investment' what exactly this means we are yet to find out but for now the saga continues. Going forward I believe 'trade wars' will become a key theme in the financial markets. Trump keeps threatening countries with new tariffs it seems on a weekly basis. Just last week he boasted he may tax EU cars when entering the US and shares of major european car manufacturers fell sharply (BMW/Daimler). As for the average investor look out for commodities - copper has been hit and fallen from $3.27lb to just under $3lb today.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.