The stock markets continue to see increased volatility as the tariff and trade war between the United States and China continues to heat up. We’ve quickly realized that one tweet, media story, or heightened news coverage can send the markets soaring or spiraling in a day. Here’s a recent example of a tweet:
The reality is that these negotiations are extremely difficult, and nobody really likes to see them be prolongated. Think about the most difficult negotiations you have probably done in your lifetime which is the buying or selling of a home and how your emotions ran high over $10,000 or $20,000 of negotiations when someone asked you to repair a cracked window or a lock that didn’t work.
We are in an unprecented $420 billion-dollar trade gap right now which really means we buy a lot more stuff from China than they buy from us. The tariffs (which really are a tax) act as a way for us to raise the prices on imported Chinese goods in an effort to close this massive imbalance. But the real question is how will this affect your day to day wallet?
At the grocery store
Immediately, you’ll see a spike in pork, tuna, trout, salmon, and a number of other meat and fish products. You’ll also see a spike in certain vegetables such as broccoli, onions, cabbage, and garlic. Our farmers have been hard hit not only by the floods, but the tariffs are starting to substantially dent their business.
At your home
On the home front, you’ll see a spike in various soaps and products and polishes for furniture. Electronics haven’t completely been hit yet, but certain household items such as vacuum cleaners will go up in price as well. You’ll see a spike in everything from rain jackets to baseball gloves to just about anything that uses latex.
What if tariffs go up again?
If you are anticipating that the United States and China will trade barbs for another round of tariffs, you might want to think about buying some items before the summers ends. Lots of people want to upgrade their i phones and they are going to cost more with another round of tariff hikes. An i phone that costs $1,000 on average will go up to $1,142 with a new round of tariffs. All types of electronics including flat screen TV’s will go up in price as well. And, even though you just finished school, back to school products, backpacks, and all kinds of paper goods from diapers to paper towels will go up as well. You could consider buying these items now before the new tariffs go into effect.
In the short term, the tariffs are just a bargaining chip in these negotiations, but we all know it isn’t a good idea if the two world’s largest economies get an extended case of the flu. You should keep a closer eye on your money as the stock markets simply do not like uncertainty and if the tariff wars continue you will see more days with larger peaks and valleys depending on Trumps tweets or the news story of the day.