The tariffs are designed to target up to $50 billion of U.S. products annually including soy, chemicals, and cars. The Chinese announcement was in response to President Trump’s unveiling of an extensive list of Chinese imports that are being changed or applied more heavily now to change what he has referred to as an unfair trade balance. China leaders seem to be referring to the situation as a lose-lose scenario, but must make a move in response.
China announced additional tariffs on 106 U.S. products in response, which seems to have heightened the fear of a global trade war, which is threatening the stock markets (Dow Jones Implied Open is -582.36 points at the time of this writing).
The effective start date for the new charges will be revealed at a later time, though China’s Ministry of Commerce said the tariffs are designed to target up to $50 billion of U.S. products annually, which will have a huge effect.
President Trump’s proposed tariffs include products used for things such as robotics, information technology, communication technology and aerospace, among others. The potential for a large scale trade war between the U.S. and China fueled market fears leading to what looks to be a large market decline for the day.
Based upon the prospect of a full blown trade war it may be time to start raising some cash to sit on the sidelines for a bit, or thinking about putting a bit of money in an inverse ETF such as SPXU (which rallies when the market declines, as its goal is to do three times daily the opposite of what the S&P 500 does). Therefore, if a full blown trade war is to develop and the U.S. markets to fall a decent chunk, SPXU would rise. It is presently at $12 per share pre-market. In my humble opinion, it has much room to run. However, be aware as should the market turn and begin to run up again it could end up with a reverse split (reducing the number of shares you own and putting those shares at a higher price, then falling in price further due to the run up of the market). i am not a financial advisor or investment advisor and this is not intended to be financial or investment advice, but is solely this author’s humble opinion. You should always understand and be aware of the risks of investing and make your own decisions, ones that you can live with and never risk more than you are willing to lose in its entirety.