This week President Trump imposed up to $200 billion in tariffs on China and China retaliated with $60 billion of their own. This battle with China and other trading partners was supposed to be a big danger to our stock market as investors worry over corporate profits. But even though trade tensions are escalating the stock market is shrugging it off.
The reason is the economy. Our economic strength and its apparent continued strength are investor’s focus. Still it might also be that Trump has shown a willingness to negotiate – such as the deal made with Mexico and the current talks with Canada. It is a concern that investors might be too sanguine at this point as the battle with China rages and keeps notching up.
Long term the battle will affect our stock market because it impedes sales and profits for corporations. However, it will take time to show up in the numbers and by then, if there are any trade agreements reached, that kind of positive news will overpower any short term profit squeeze.