The US and China have not been on great terms lately. So they’re working on new ones. Specifically, trade terms. After a long game of ‘my tariff is bigger than your tariff,’ the world’s largest economies have signed a “Phase One” trade deal.
Here’s what that could mean for your money.
You won’t go broke buying new tech. During negotiations, the US cancelled tariffs on goods like smartphones, laptops, and headphones that were scheduled to start last December. But before you start shopping, consider that there are still tariffs on LOTS of Chinese imports. Which could bump up the price of cars, shoes, washing machines, and more.
The economy could be on the up and up. Supporters suspect the trade deal will encourage Americans to spend more. And increase American exports. Aaand help heal our tenuous trade relationship with Big Red. Just what businesses (and the economy) want to hear. That could be good news for the job market. But not such good news if you’re holding out for lower interest rates to buy something big, like a house or car. Because the Fed doesn’t usually cut rates when things are going well.
Your money could move. Specifically, the cash in your retirement accounts and investment portfolio. Markets are not a fan of trade drama. Things have been looking up since the “Phase One” deal was announced. But some experts worry China won’t be able to hold up their end of the bargain. Which could spook investors...and cause another dip.
theSkimm: After almost two years of bickering, the US and China have found some things they can agree on. Their “Phase One” deal probably won't solve everything. But it could be a step in the right direction. It’s also a reminder not to make major investment decisions every time there’s a new headline. And maybe a sign you should get the new iPhone – as long as it’s in-budget.
Hi, pass-through costs. Bye, market stability.
Trade wars can cause a ripple effect on pretty much every area of your finances.
It's a beautiful day in the neighborhood.