The initial tariffs have gone “live,” and it’s possible, according to President Trump, they’ll eventually touch more than $500 billion of goods.
So the move toward protracted, painful trade conflict is underway; this despite numerous public reassurances that the disagreements would all get worked out.
Christopher Beddor, writing for Reuters, correctly points out it is not the tariffs, per se, that represent the real problem for investors. It is, rather, a variety of related fallout from tariffs and the growing spirit of uncooperation between the world’s two largest economies that should keep retirement investors wary.
Trade War Effects Could Be Substantial and Far-Reaching
The title of Beddor’s article flatly declares the “U.S.-China trade war to be fought in the trenches.” Citing the aforementioned figure of $500-plus billion of goods that could be covered by the tariffs, Beddor says things are “going to get ugly,” with overall investment likely to substantially suffer because of all the accommodations that will have to be made on behalf of the acutely hostile trade environment.
Those concerned about the macro effects of a trade conflict know the potential ramifications far outsize the most immediate and direct effects of tariffs. Those ramifications, as Beddor points out, include the arduous and very costly task of creating workarounds from existing supply chains, the loss of capital spending from businesses unwilling to invest during a hostile and uncertain trade climate, and the renewed reluctance of both the U.S. and China to invest directly in one another.
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There’s more. As friction over trade mounts between Washington and Beijing, the palpable climate of distrust that has largely characterized relations between the U.S. and China grows more intense, and risks becoming an even greater issue than trade troubles. Beddor notes, for example, the Trump administration started clamping down last month on visas for Chinese students. More ominously, the chance of military conflict breaking out between the U.S. and China appears to be moving higher, too.
A trade war – and all that’s connected to one – could have a substantial impact on investors. Some very learned investment minds, like those at Bank of America and elite asset managers such as GMO’s Ben Inker, see losses on a scale of as much as 40% resulting from a trade war. But should it come to pass that a trade war leads to a shooting war? It is difficult to imagine on what basis such a turn of events would prove any less than catastrophic for traditional financial markets.
Help Insulate Your Portfolio from U.S.-China Conflict with Physical Gold and Silver
The climate of hostility growing between the U.S. and China is precisely the sort of reason why it’s so important to have a portfolio that’s effectively diversified. Smart asset selection can help ensure that when equities and other traditional assets are under pressure, your portfolio contains components likely to thrive during periods of volatility.
Physical gold and silver are examples of such component-assets. If you currently own an IRA or 401(k), it’s probably loaded with equities. You might have a few bond instruments and cash thrown in, as well. But if that’s all you have in it, you are woefully unprepared for trouble, in my opinion.
Don’t be unprepared – there’s no reason for it. It’s very easy to effectively diversify your portfolio with precious metals, including physical gold and silver. Call Augusta Precious Metals at 855-976-5436 to learn more about the benefits of adding a gold or silver IRA to your total retirement portfolio.
Relations with China are worsening. Is your retirement savings ready to withstand the troubles?
By: Isaac Nuriani, CEO, Augusta Precious Metals
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