After mid-2018, the stock market has gone through a lot of turmoil following a trade war between the US and China. It is assumed that this war could be short-lived and the relation between the two countries could improve in a few months as a fresh trade agreement could be around the corner.
According to U.S. President Donald Trump at present, an in-depth deal is being formatted so as to improve U.S. exports and remove the ongoing dispute between the two countries. On 29 December, he said that that deal is going in the right direction and if everything went according to the plan it would tackle all the areas which required to be handled.
The trade agreement is to close around 1st of March of the coming year between them. Owing to the vast areas and commercial aspects that need to be covered through the deal, it seems a matter of concern for the ambassadors of both the countries to come to a joint conclusion.
At present, China has stopped the high duty levied on a few products and places, for instance, taxes imposed on car exports. Tesla and a few other car manufacturers were charged an enormous rate of 40% before. This duty made Tesla China sell the Tesla model 3 at a high rate of $99,000 or even higher. The China government temporarily discontinued duties on cars including various other export items of the U.S., ultimately relaxing the American companies. It is now to see whether or not the trade deal is implemented by the closing of the first quarter next year, cause a failure in the deal could lead to a high tax on U.S. products once again.
This reduction in duty had brought down the prices of Tesla Model S and X by 25 to 30 percent, and its current Model 3 costing $99,400 fell by 27 percent thereby now costing $72,000.
Economists, however, are sure that the deal would be signed before March. If not, it could be a loss for both the countries as duties would be charged to the same extent as they were before December.
Though China has lowered down its rates considerably on various U.S. exports, it is threatening to resume its prices if the deal is not struck by March 1. There was a 15% hike in Chinese products amounting to $200 billion mainly relating to electronics and machinery. This has led to a significant blow on this sector, which has already been trying hard to survive.
Industries that carry work in various fields are getting themselves ready for a demanding future ahead. Chairman of Tianming Group, which works for health care finance and construction sector, has stated that they would be very careful about their investments. He emphasized increased savings as difficult days could be faced in the future. Thus they would need greater liquidity to sustain the harsh conditions of 2019.
Failure could also see some unfavorable clouds hovering on the stock market of both the countries as well. Any deal that is supported by both the economies could definitely see a bounce on the U.S.-China stock markets later on.
Stock Market Could Rise in 2019 Following a US-China Trade Deal
December 31, 2018