Western Courier

A trade war would not be good

Juan Casas, Courier Staff

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There is a growing discussion of war, whether it’s an intervention war in Syria or a trade war with China. We already know what a Syrian intervention war looks like, now let’s inquire and discover what a trade war looks like.

A trade war is when one or more countries’ interactions of trade are deliberately impeded in order to place a burden on a perceived rival trade partner. Up until a month ago, there was only mild talk of an impending trade war, but that mild talk imploded into outright rantings. The current presidential administration declared that a 25 percent tariff would be levied against aluminum, while a 10 percent would be placed on steel imports. What is a tariff you may ask? It is a tax on goods, whether it be imports or exports.

During the campaign trail, the president had repeatedly declared that the days of letting China walk over the United States regarding trade will come to an end. A month ago, the announcement of trade tariffs appears to be the beginning of that end. Unfortunately, the original tariffs on aluminum and steel would not actually hurt China, but our main European allies including Canada. Compared to China, Canada exports considerably more aluminum and steel to the U.S. Not only does this hurt Canada, but it also hurts our European allies like France, Britain and Germany to mention a few. All of the countries mentioned above have sworn to respond with their own tariffs on U.S imports of pork and whisky.

Soon afterwards, the presidential administration declared further tariffs, but this time directly laid against China, by placing tariffs on an estimated $20 billion worth of Chinese goods. If it would have ended there, if China would have only taken it without retaliation, then perhaps it could be said that this trade war was quick and easy to win, yet it appears contrary. China quickly announced its own tariffs of U.S goods of up to a billion dollars worth. In return, the United States declared another wave of tariffs on up to $100 billion worth of Chinese goods. Now it appears that a real long lasting trade war is inevitable, luckily the entire world cautions both the United States and China in its dangerous route. As of April 23, the United States has hinted towards an uneasy truce with China.

If this rumor comes out to be true, then the fallout of a trade war might just have been avoided, if it doesn’t, the global market will feel it. Whether you agree with a protectionist agenda or you do not is up for debate, what is not up for debate is the fact that historically protectionist administrations and their agendas tend to be followed by an economic downturn in the form of a recession. That being said, there are times when a trade war might actually be beneficial. That comes to an individual basis, and by that I mean investors with a lot of cash at hand who are itching to jump into the market when it’s at a historic low, a trade war can produce historic returns when it comes back up from a recession. Yet, those returns would come at the expense of the majority who are already invested in the market.

Personally, any time is the right time to invest in the stock exchange, the problem isn’t so much a trade war but being afraid of the sound of a trade war and never investing to begin with. Invest while young, invest consistently and don’t ever stop are the rules of the game. The younger you are and the more you put in, the more you will have available when you do decide it’s time to retire and withdraw those funds.

So when it comes to being in college, investing while at Western Illinois University is important for long term financial success. Most importantly, don’t ever let the noise scare you away, don’t let a downed economy hinder you from investing and don’t ever run from the market by pulling out to early, you cannot time the market, no one can and that is why you should never pull out until you are finally ready to retire.

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A trade war would not be good