Why China’s Latest Move Lends Positivity to the Stock Market
China’s latest tariff cuts have filled investors with optimism, and have made the stock market a positive place. But all eyes are on future moves.
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The stock market can be quite a rewarding environment, but also quite tricky. With the services of an experienced online trading brokerage, you have the technological support you need to get started. US - China Relations Normalizing With China further cutting tariffs on imports from the United States, the relations between the two countries are normalizing. While that’s encouraging news, there are more things to remember. It’s been around one and a half years since the heightened tensions have been keeping investors in suspense. It all started with the US having kicked it all off with tariffs imposed on Chinese imports. China then retaliated, and the tug of war has continued ever since. There has been nervousness among investors on how and whether this would escalate further. But in recent times the relationship has improved. Phase 1 of the trade deal was the breakthrough needed, which paved the way for future discussions and negotiations. It instilled hope that there is some scope for things to get better. With China’s latest move, investors believe the path is cleared for more regularized trade relations. More such moves are expected in the future. So, let’s have a detailed look at the epidemic-ravaged country’s latest move and its implications for investors: Specific Tariff Drops Specifically, China has dropped US crude oil tariffs to 2.5% from 5%. Tariffs on soybeans had been raised to 30% from 25% in September 2019, but they have now been reduced to 27.5%. Pork tariffs have been cut to 55% from 60%. Beef tariffs have been reduced to 30% from 35%. So, China’s move has been towards cutting the tariff rates imposed in September. But by that time there were already tariffs imposed on some products. Since the reductions were on the September tariffs alone, despite them being halved, the overall reduction from the initial tariffs has been insignificant in some of the cases. The revised tariffs are to come into effect on February 14. So Caplinger estimates we don’t really need to exaggerate these reductions. It could well be that China is looking to see if the United States would follow. This strategy could benefit both countries, though Caplinger reminds us that US trade policy keeps shifting.
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But the good news is that investors have been positive about this move from China, and the markets can benefit from that positivity. The future moves of both the nations will be worth watching. With direct access trading platforms helping in online trading, it’s easy for anyone to make the leap into the stock market.
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