Hey there, Peak Prosperity subscribers. This is a quick scouting report on the recent China trade deal. It was announced last night (Sunday), and it’s a bit of a mixed bag.
First off, the deal has led to a significant adjustment in tariffs. China’s tariffs on U.S. goods are now at 10%, which is lower than before, but U.S. tariffs on Chinese goods have jumped to 30%. Which is less than last week, but a lot more than when Trump took office. Who knows what or where they will be in 90 days when this “pause” expires?
But, for the next 90 days, all this means is that somebody has to pay 30% more for Chinese imports. If that’s ‘the consumers,’ then this will dampen demand.
Now, here’s where it gets interesting. There are exemptions to these tariffs. Lots and lots of exemptions. It gets complicated quickly.
Electronics like smartphones and laptops are exempt, which is great news for companies like Apple and Nvidia. However, if you’re a small or medium-sized business importing other goods, you’re probably facing an immediate 30% increase in costs, which isn’t so great.
The market reaction was immediate and dramatic. Futures jumped when the deal was announced, and there was another spike when it was revealed China had lowered their tariffs to 10%. But here’s the kicker – if you weren’t up at 3 AM to buy into this rally, then you missed out.
by vtgothic 
