The news on the trade war with China has been building steam. I think it’s time to reflect on the implications and likelihood of an all-out trade war. Personally I do not believe this will escalate into a true trade war. I think the current confrontational situation between the US and China will reach a compromise fairly soon. We both have too much to lose to allow the current trajectory of escalation. China remains the second largest economy on a GDP basis and the fastest growing large market in the world. Remember, more than 400 million people in China are ‘middle class’ (purchasing power equivalent to $50,000), which is larger than the entire population of the United States! The US depends on China’s large economy’s for a large share of its exports.
Today, China is the world’s largest exporter. so they too are largely dependent on the large economy’s (US and the European Union) to sustain and continue their growth. Mutual dependency is an extremely strong motivator. I hope I’m right, as Infintium’s parts cost from China have increased lately, putting pressure on company margins.
(Originally published on CNBC –)