#Trade #War Update

For people working in Supply Chain these months have been very difficult. Every day there are some new rumors about which products will be affected. As of today, America's list covers Chinese goods worth of 47B USD which represent 9% of the total goods imported into America last year. On the other side, China's list cover 50B USD with represent 38% of their exports.

In the Figure below prepared by the Peterson Institute you will find the Goods that as of today are planned to be subject to Tariffs.

I find this Chart extremely interesting. The Strategy of China is very smart, in my opinion, because they are targeting products from parts of the USA where President Trump got quite a lot of Voters.

If we look at the American portion of the chart what concerns me is that the Import Duties may have a positive effect on Inflation. So the American Consumer will pay more for mass market items like Electronics, Televisions and Printers. As o today the impact on Auto Parts seems to be "only" 1.8B USD.

I am very concerned about a potential spike in inflation that may force the Federal Reserve to increase Interest Rates more than expected pushing the US into a new Economic Downturn.

Much is at stake here and the outcome of this "negotiation" between China and the  US is very difficult to predict.

I recommend a piecemeal approach in order to adjust Companies Strategies based on the evolution of this "negotiation" between the two super powers