China's Impact on the Global Economy

A few of our latest topics converge as we discuss Trump's new Trade deals, the ongoing trade war with China, and of course - the Coronavirus. 

How are all of these related?

Since the outbreak of the Coronavirus, the world has stayed attached to their mobile devices and computers, waiting for updates in real-time on the growing epidemic that many fear could become a global pandemic that makes the SARS outbreak of 2003 appear tame.  The world was frankly - not prepared for a global pandemic, and speculation is flying on what it could mean.

If you've followed our last few newsletters you know that China has been a buzzword for a while. It's no secret - with the 190.85 billion dollars spent, and with most products in the U.S. and many other 1st world countries bearing the label "Made in China" that more than 13% of the entire world's supply of import comes from China. Since the Coronavirus outbreak, a chain of events has made economists, scholars, and doctors speculate as to what exactly could follow. In recent weeks, China's small businesses have felt the most pressure as mandated closings and restrictions have rolled out in response to the rapidly spreading pandemic. Bigger companies are feeling it too of course as almost all transportation except emergency evacuations of U.S. citizens has halted. 

Late last month, President Trump decided that the tariffs on Chinese products would not be lifted in lieu of the current health crisis. High tariff costs, in combination with mass closings, and a dropping trust in investment in the Chinese market globally has begun to rip apart the world's 3rd largest distributor of goods in the world. The result of which is already being felt in what could be the decline of China as a superpower and as a major distributor and the rise of other countries and entities in the midst of the crisis. Some economists are even predicting that - albeit lacking in sensitivity - U.S. foreign trade will come out favorably in the event that China is crippled amidst the current pandemic. 

In the past few days, the president sat down to renegotiate the terms of the North American Trade Deal, and in combination with the Coronavirus outbreak - it could mean a resurgence in imports and strengthened trade relationships with Canada and Mexico with exclusive concessions to make the transition practical and mutually symbiotic. 

What it means for the world right now though is that the number of goods being imported from China may soon slow if it's effects aren't already being felt - and some imports could stop altogether. In an attempt to stop the spread, not only have most businesses been forced to temporarily close their doors - but imports are being stopped as to avoid inadvertent contact and spread. Our global reliance will mean that the response with adequate replacement imports will need to be fast, and if it isn't - delays can and should be expected. 

Now that the Coronavirus has seen cases in a growing number of countries - the concern isn't just of those returning from Asia. While it's important to be vigilant and to practice efficient health and safety habits - the flu does present quite often during this time of year and many doctors are claiming that the response isn't justifiable to the panic that seems to be ensuing in the United States. We, of course, encourage vigilance and observance, but we also encourage not to panic. The number of cases in the United States remains incredibly low, and billions are being donated from organizations around the world to put an end to the crisis. Should trade relationships change, it will affect businesses worldwide and it is only speculation as to how and exactly when these changes could be seen. As for China, it's citizens and business people suffering tremendous loss and fear - we send our thoughts and prayers with them at this trying time.

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