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Golly gosh, it’s that time of the week again right?
Another episode offfff TheFrugalSamurai.
A bit late on this post, apologies guys – been driving around half of Sydney yesterday chasing my tail.
THEN I realized I was doing so somewhat illegally… as I completely forgot about renewing the bloody car insurance.
LUCKILY nothing happened (breathes huge sigh of relief).
Excuse my absent-mindedness, got a lot on my plate.
Like?
To tell the truth, a big sticking point is figuring out where to make my dollars work the hardest right now.
Traditionally I’m a property and shares kinda guy as you know, BUT currently real estate in Australia ain’t doing too well, and values are still a bit high for my liking (a 10-15% pullback from a million dollars is still a lot of dough).
Inter-state ain’t doing too much better, and with the high likelihood of a change in government…
What about shares?
Again, my belief is that it’s looking a bit “toppy” at the moment, with values grinding their way upwards… I’ve just taken a bit of cash off the table and waiting to see what happens.
Waiting for what?
This “Trade War” to settle down for a start.
What’s a trade war?
It’s when two countries decide they have nothing better to do than lob taxes against each other’s well, trade.
Usually one country (USA) imposes additional taxes called tariffs against goods – let’s say Apples, imported from another country (China).
This has the effect of raising prices, hence discouraging consumers to buy less of those delicious, juicy apples and more of a cheaper (untaxed) competing good, let’s say succulent, wholesome oranges.
Consumers (you and me) are usually worse off because we pay higher prices for a smaller amount of apples and exporters (China) are worse off for having sold a smaller quantity of apples at a lower price.
So what?
As expected, China has imposed retaliatory tariffs against some US goods, and have left the door open for more action.
Hence watching a full-blown trade war evolve before our eyes is something not many of us have experienced.
Seemingly volatility in the markets across currencies, interest rates and equities has returned and movements are guided largely on gut instinct and very little on fact.
Which is incredibly scary when these days we may as well be relying just on President Trump’s twitter account for market movements.
Why’d he start it?
Jeepers Creepers you are pushy aren’t ya.
Look, I’ve no idea why he started it BUT I do have this very TELLING interview clip on Youtube he gave to Oprah way back in 1988.
Some of what he says are just… go on, watch it yourself.
(Note, I don’t own the video, so please Google/Youtube/Internet Gods, don’t take it down here, but in case Big Brothe… I mean it does get taken down, it’s called “Donald Trump Teases a President Bid During a 1988 Oprah Show”).
Oh.
Yes indeedy.
Logically and with good reason, you’d think that this “tit for tat” stance of both countries benefits neither, which is why many people (myself included), have hit the “sell” button to wait it out for when a clearer picture is formed.
Smart.
Well, not necessarily – there are some winners here.
Like who?
Well, domestic (China and US based) orange sellers for a start.
As the cost of importing those luscious, tender apples increase – more and more consumers head over to the orange market.
Which leaves orange sellers to sell more (more profit) or increase prices (more profit).
That’s President Trump’s reason for starting this “war” methinks, for the betterment of domestic companies.
So… buy the shares of the orange companies then?
Yeah… yeah… I… I think I will.
What else?
Now that you mention it, as Chinese exports to the US come under more and more pressure, other exporter countries unaffected by the tariffs have thrived.
Electronic exports from South Korea and Taiwan to the US have increased rapidly as Chinese exports of these products fell.
And from the Chinese side, they’ve exercised their political clout to do business away from the US.
President Xi recently signed a whopping $35 billion deal with European Airbus for 300 new planes – leaving the US based Boeing very much in the air.
It’s looking up for those countries China seeks to ground the US.
Just plane awesome… OKOK, I’ll stop now.
Hm, well then buy into those countries that benefit from this trade war!
Wow… you’re good.
So Simpaul.
Now you’re just showing off.
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32 Comments
Amber
I admit, I don’t know much about this. I’ve heard about it on the news. I do know President Trump is a moron though.
The Frugal Samurai
Hahahaha, everyone’s entitled to their opinion right! Hey, you guys voted him in, that’s democracy for ya!
Tara Pittman (@momknowsbest15)
Sad that trade wars happen. It hurts the people who need the products
The Frugal Samurai
This is true, don’t think anyone benefits in this case…
Sarah Bailey
This is really interesting to read. I have to admit I knew little to nothing about trade wars before this so thank you.
The Frugal Samurai
No problem, twas a pleasure – thanks for reading!
Krysten (@WeirdGirlBlog)
I honestly can’t endorse anything that Trump does. I can only hope that we all make it to the election alive and vote him out before he ruins everything.
The Frugal Samurai
Ouch, that’s a fair call – but how come he was voted into the Presidency in the first place? That’s democracy for ya…
Chad
This is amazing! Thanks a lot for tackling such a complex topic in such an easy way to understand, love it.
The Frugal Samurai
My pleasure! Thanks for reading, and come back for more!
Amanda
Very interesting. Thanks for sharing this info.
The Frugal Samurai
No problem, thanks for reading!
StephJ
This is such a interesting topic and one that is so complex that many people dont really like to dive into it to much. It is however something that affects us all.
The Frugal Samurai
Yes indeedy! Thanks for reading and hopefully made ya think a bit!
Joanna
I never knew what a trade war is. I know that US and China don’t really have a good relationship, such as US and many other countries, since the “new president”. However, I didn’t know how to take advantage of the situations.
The Frugal Samurai
Haha I didn’t know too much about it either! And yep, talking to myself made me realize I still don’t know that much! Hahaha, thanks for reading.
Claudia Caminero
Thanks so much for explaining it in simpler words.
The Frugal Samurai
No problem, I aim to please! Thanks for reading.
Hannah Marie
I am honestly not very familiar with this. I think I overheard some old couple on a bust talking about it once. Pretty interesting actually.
The Frugal Samurai
Yeah it is! Just something that’s going on in this world which most of us are ignorant to! Thanks for reading.
delhifundos2014
Thanks for sharing detailed information about trade wars, earlier I dont know much about this topic
The Frugal Samurai
No problem, thank you for reading!
Pamela A Frost
Thank you for your opinion. I don’t like to get into political discussions via social media or blog posts.
The Frugal Samurai
Oh no problem, not a fan of politics either… just laying out the lay of the land, thanks for reading!
Lori Bosworth
I’m not well versed on this subject. I do know that the U.S. just removed tariffs on Canadian steel and aluminum, which is good for Canada.
The Frugal Samurai
Did they really? Wow thanks for educating ME on a subject I didn’t know too much about – yes that would be great for Canada!
Tadpoles And Mud Puddles
Politics! They definitely are good at messing with everything. Trade wars never help the countries involved and clearly the politicians need something better to do with their time.
The Frugal Samurai
Hahahaha totally agree with you – quite clearly they need to get their heads checked right? Look at what’s happening in the UK, golly gosh! Thanks for reading and you’re insightful comments as always!
toastycritic
I think it can be difficult with relationships between countries about how they deal with trade and what one should do if one side puts their hand on the scales to help their companies. Something must be done to put things on an equal footing if you are a leader.
The Frugal Samurai
Yes it’s true, but these politicians and the way they do things… ARGH, but we have to be blessed we aren’t in the old days when, if two countries don’t agree with each other… they take up arms instead – thanks for reading as always!
Alexandra Cook
I would love to have my own orange tree. I want a green house just so I can do it.
The Frugal Samurai
Hahahaha love that’s what you got out of it! Same here, I LOVE oranges… so damn good for you!