Wealth Management Resources by Wealth Enhancement Group

May 2019 Market Update: Volatility and U.S.-China Relations

Negotiations between the U.S. and China reached a boiling point over the last week and the U.S. instituted higher tariffs (from 10% to 25%) at 12:01 a.m. on Friday, May 10.

The escalating conflict has set off a firestorm of headlines, but the two sides have continued to avoid a full-blown trade war and are still negotiating.

A U.S. decision not to apply the mark-up in tariffs to goods already in transit from China to the U.S. effectively provides a window of two or three weeks for talks to continue before Friday's trigger begins to bite.

Until Monday, May 13 markets generally behaved in an orderly manner, even though it appeared a deal was in jeopardy several days before the additional tariffs were triggered.

With the recent actions and rhetoric an agreement is looking less likely in the immediate days ahead; however, partial resolutions and market-friendly Central bankers in the U.S. and China appear likely to keep the market from a dramatic downturn related to this specific issue.