US retirees, savers and businesses are paying the cost of trade war: Seth R Freeman, GlassRatner Advisory

There is going to be equal pressure on both Trump as well as the Chinese, said Seth R Freeman, Senior Managing Director, GlassRatner Advisory, in an interview with ETNOW.

Edited excerpts:

On one hand, it looks like there is going to be a resolution in this US-China trade war but Trump again and the US Trade Representative are coming out and saying that come Friday, they are going to impose the higher tariffs on Chinese goods. What do you make of this divergent commentary?

This is certainly one way to take the attention away from the Mueller Report and problems in the White House, that is one view coming from the United States. Certainly China wants to avoid this problem because they are sending their vice premier to Washington for these negotiations, and we will see what the effect is today on the markets. Yesterday, there was volatility in US markets and quite a swift downdraft.

US at this point seems to have the upper hand as after the US threat, China did agree to go ahead with trade negotiations today?


It depends how you evaluate the outcome. First, we put tariffs on Chinese goods and China put tariffs on our goods. In terms of evaluating who has the upper hand, we also have to look at who is bearing the cost and in this particular case, China is not bearing the cost. US consumers and frankly US retirees and savers and US businesses are the ones paying the cost.

Do you see some more downside now for the markets or would the markets hold on to their horses for now?

There is a risk of downside continuing and one has to see what kind of negotiations will happen. We have seen a situation where there is a lot of sabre-rattling and extensions are granted or imposition of new tariffs are delayed and more talks take place. One of the problems is of course that markets do not like that kind of uncertainty. The sooner it gets resolved, the better it is for the market but this does have implications on global growth in the meantime.

Given China’s stand so far, do they stand to be impacted in a much worse way than the US if the trade talks fail?

I am not certain of that. Of course, we have seen various economic numbers coming out of China. We are told one quarter that the economy is in a very bad shape. The next quarter is looking better and certainly the US is a giant importer of Chinese goods and some services. There may be some long term damage to China. On the other hand, its domestic growth in terms of wealth continues to expand and so it is very hard to say if they will be hurt more. I would say that if the new tariffs are imposed, then the US consumers and businesses are going to feel the pain.

How can we expect the talks to pan out today?

There is a lot of pressure on both sides, Trump is quite proud of the way the stock market has turned. He is riding a wave of generally positive economic moves. But the price of oil going down and supplies going up could be negative for the whole economy. So, there is pressure on Trump, there is also going to be equal pressure on the Chinese negotiators because they also need to come home with good news as well.