Trade clock keeps ticking

78 days to go, out of 90, to the implementation of full tariffs and, so far, there has been a lot of comments regarding progress on negotiations, but little facts. In addition to that, there are also some reports that say U.S. customs cannot collect the tariffs imposed due to lack of infrastructure and above all, clarity, on which products are included in the sanctioned baskets and which ones are not. If we look at the chart below, it takes on average 18 month to negotiate trade deals and 48 months to implement the measures. That’s almost 4 years! And the countries in the chart below do not have the leverage China has, so it may take even longer. President Trump may not know the history, and if he does, he may ignore it, but it’s highly likely that China does know how long it takes, and will try to use it in his favor. The problem with these trade negotiations, is that it increases the level of uncertainty, and makes every decision by C-level executives, very uncomfortable. And that may affect earnings. More pressure likely to come if the second quarter gdp comes in negative or close to zero, and that’s why President Trump is pressuring J Powell to lower interest rates. He needs time to negotiate without losing the support of the American public, and China knows it.

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