The US-China trade war has been dominating the headlines over the past several months, with many claiming this is will lead to our next economic downturn.
For context, here are some other significant economic events where similar claims were made:
We will have an economic downturn at some point, but trying to predict the event that will lead to that downturn is very difficult. In fact, some downturns are not associated with a specific event at all, and are simply a normal part of the business cycle.
-In 2018, the US purchased $540 billion of Chinese goods. China purchased $120 billion of US goods.
-The top trading partners with the US year to date:
-We have new trade deals signed with Mexico, Canada, and a deal with Japan has been agreed to in principal. These agreements still need to pass legislature in their respective countries to go into effect.
-Companies are reconfiguring their supply chains and suppliers are leaving China in favor of places like Taiwan and Vietnam to avoid tariffs. For example, Home Depot expects to buy $1 billion dollars in goods from suppliers who have moved away from China.
-Of the $22 trillion in US national debt, China owns just over $1 trillion. Roughly $3 trillion is owned by other foreign entities, and the remainder by the American people and the government itself. US government debt is another story and deserves its own article!
While a prolonged trade dispute could certainly contribute to a downturn, recent economic data continues to point to a healthy consumer, job market, and economy as of this writing.
I hope this update was helpful. If you have any questions at all, please do not hesitate to contact the office.