U.S. - China Trade Dispute Continues to Simmer

August 6, 2019

Trade war drama has challenged U.S. market sentiment, but this story has been a re-run for the past year.  Even though tensions will remain high, we still believe a near-term recession is only a remote possibility as the latest monthly job reports continue to be favorable.  On an annual basis, we import over $500 billion in Chinese goods and services, but export less than $150 billion, for a net deficit of nearly $400 billion.  (see chart) 

This trade imbalance with China represents about two-thirds of our entire global trade deficit of $565 billion, which itself represents roughly 3% of total U.S. GDP.  While yesterday was the worst market day for U.S. stocks in 2019, it will likely be viewed as another short-term swing by year’s end. The good news is that American companies have been resilient over time and are likely to learn how to compete globally with less dependence upon a low-cost Chinese supply.  W
ell-diversified portfolios are less vulnerable to these short-term fluctuations, with bond investments rising as stocks retreated.  Always check with your financial advisor to help rebalance your holdings as needed to meet your long-term financial objectives.

Graph of Trade data
Disclosures: Past performance is no guarantee of future results, and the opinions and other information in the Current Economic and Financial Conditions Summary are as of July 15, 2019. This is a special report designed to provide investment information on economic markets for Commerce Trust Company’s clients. It is intended to provide general information only and reflects the opinions of the Commerce Trust Company Investment Policy Team.

This material is not a recommendation of any particular security, is not based on any particular financial situation or need, and is not intended to replace the advice of a qualified attorney, tax advisor, or investment professional. Diversification does not guarantee a profit or protect against all risk. Commerce Trust does not provide tax advice or legal advice to clients. Consult a tax specialist regarding tax implications related to any product and specific financial situations.