Why This Trade War Is a Big Deal for Your Retirement Money
Win/Win or Win/Lose? What is the appropriate answer? It is a commonly asked question in the form of negotiation. Win/Win is a trait of successful negotiations. In a negotiation, both sides state their position and slowly but surely they meet in the middle for a win/win. Never would a side declare ahead of time that this is a win/lose proposition or the negotiation fails.
If you want a lesson on negotiation, read the Art of the Deal by Donald Trump. He is a master of negotiation in the business world. How does that translate into the world of countries and politics? Well, that is yet to be determined. In business, you can go to war and declare win/lose negotiation and get away with it. Can you do that in politics where the loser has to save face?
From the very beginning, President Trump declared the tariffs placed on goods coming into this country as an "easy" win for the US as well as declaring we would win. Unfortunately, we are dealing with countries who have national pride. Thus, the win/lose doesn't set well. As a result, we go to war... a trade war. Do you really think that President Trump is prepared to lose the trade war in any way? Remember he is about the optics. Do you think that China is going to take the arrogance of the United States and just bow down to President Trump and drastically alter how they are doing trade?
Well, with the number of tariffs that china has issued, I don't think so. This is the downside with a Trump administration. Someone has to win and someone has to lose. Can the United States always win? One of two things will likely happen. Either China gives in and Trump is declared the master of all negotiations or we damage our economy by the unintended consequences of a trade war. Some will say bet on Trump. I would, without hesitation, if we weren't playing with the dangers of politics.
So, why does this effect your retirement money? Well, the stock market is somewhat ok/unsettled by the idea of a trade war. However, it is the unintended consequences that we don't see that might just rock the market and as a result your retirement money. Keep an eye on this one. It is a big potential risk.