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The U.S. Trade Climate with China Is Getting Worse

Trade relations with the U.S. and China haven’t been great. According to Paul Gruenwald, chief economist at S&P Global Ratings, the entire world could start suffering because of this.

“The trade by itself doesn’t really move the needle in terms of the macro. But what we’re worried about is the trade spat drags on … consumers stop spending so much, firms stop investing, confidence goes down, and we go to a less good growth path.”

If two of the world’s largest economies enter into a trade war, it could cause a noticeable decline in worldly economic growth. Talks are currently taking place in Beijing between the two countries. Both plan to initiate harder levy tariffs against each other. At the same time, China has already canceled several soybean shipments to the States over the past month. Even though U.S. Treasury Secretary Steve Mnuchin and Chinese Vice Premier Liu He are leading their respective delegations in China, there is little faith that an acceptable resolution will be found.

Gruenwald doesn’t believe that we’ll come to peace, either. Instead, he believes they” instead focus on IP investments.

“I think the relationship between U.S. and China is much more complicated. So it would be nice if the trade were an initial salvo into discussions about investment, IP, reciprocal investment — sort of go back to the strategic economic dialogue we had 10 years ago. That would start to go down the road to a better outcome. But right now if it’s just a trade thing, that path doesn’t look too good to us.”

Maybe now is the time to learn to grow soybeans, it sounds like they’re going to become fairly scarce in the states here soon.

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