The Economy Is Cooling as the Trade War Drags On

The economy grew at an anemic pace of 1.9% in the 3rd quarter.  As the trade war drags on, American businesses are taking a financial hit. No one even really knows about whether a recession is likely or not. Not even startups and small businesses being spared. With the economy cooling after so much growth, what do we have to do to prepare for the future?

Thinking about making changes to your business? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Tariffs Have Increased the Cost of Doing Business

According to the 2019 Small Business Confidence Survey, small business optimism is starting to fall. Nearly 40% of small businesses have experienced an increase in cost due to tariffs.  Over half of these companies have increased prices to cover these costs.  As a result, nearly ½ of those businesses have lost revenue from the price increase. 

As the Economy Cools, the Trade War Gets Less Popular

According to the 2019 Small Business Confidence Survey, small business optimism is starting to fall. Nearly 40% of small businesses have experienced an increase in cost due to tariffs.  Over half of these companies have increased prices to cover these costs.  As a result, nearly ½ of those businesses have lost revenue from the price increase. 

The US-China Trade War is mostly just a fingerpointing campaign between two superpowers

There Are No Good Options

Many small businesses have faced tough choices since the beginning of the trade way in January of 2018.  None of which are great.  We touched on the impact of raising prices. Inventory stockpiling is risky given how we are governing by Twitter. Loans are problematic since the duration of the tariffs are unknown.  Every option increases either the cost to the business or the customer. At the center are politics involving China and more that no one knows what to expect in the first place. The trade war continues and we just have to witness it.

Nothing is Going to Change Until After the 2020 Election... at the Earliest

According to Forbes, the latest truce is a big nothing burger.

The US-China Trade War is one with finance, not with weapons

"a nothing-burger," said Scott Kennedy, who analyzes China's economy at the Center for Strategic and International Studies. "I call it the 'Invisible Deal.'... The only thing that happened Friday was that the U.S. delayed the tariff increase."

"It's curious that Washington and Beijing have not yet put this 'deal' in writing," said Wendy Cutler, a former U.S. trade negotiator now at the Asia Society Policy Institute. "That suggests that the details may not be worked out yet. If that's the case, we should expect more bumps in the road

Forbes

With the impeachment in full swing, the Trump administration is in a very weak negotiation position. Therefore, any deal that we will get is not likely to be a good one.  As a result, Congress will have little appetite to approve it.  If Trump survives and is re-elected, then if past is precedent, the uncertainty will drag on.  If not, then the trade war will likely end.  

In summary, the best we can do is to continue to ride out the storm.  Hopefully, the economy won’t go south before the trade war is resolved.  But every day it continues the risk increases. 

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin

See How Your Business Stacks Up

Our proven Instant Business Assessment Quiz can show you how you business compares with others. It also shows you how you might be able to be even more successful