The State of Trade

There's been a major risk hanging over US investment markets and our economy over the last two years. What's this risk? It's the possibility of trade Wars with our partners around the world, countries like Canada, Mexico, China, and the European Union. A full out trade war with these countries could cause severe economic damage. Now, it looks like these clouds are lifting somewhat. The news of a trade agreement between US, Mexico, and Canada is truly a big deal. The agreement, called USMCA, is a very important step in the right direction. Here's why.

Canada and Mexico are by far our two biggest trading customers. As you can see from this graph, Canada accounts for 18% of US exports and Mexico accounts for 16%. by comparison, China only accounts for a much smaller amount, at only 8%. In short, Canada and Mexico together are our most important customers and partners, and we are now committed to work more closely together. It's becoming more apparent that the longterm objective of US trade policy is to position a strong North America as a counterbalance to China, to protect against dependence on Chinese manufacturing and to protect against the theft of our technology secrets. That's the real underlying goal of US trade policy.

So, reaching trade agreements with China will be much more difficult. Tariffs with China could remain for a long time, so we don't expect that to be resolved any time soon. What's the take away? Investments in emerging markets, like China, still look to be dangerous right now. The North American economies together will be a powerhouse in the future. We hope you found this video helpful, and if you have any questions or comments, please feel free to let us know. See you soon.

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