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Trump Says Trade War Off; China to Invest Heavily in U.S. Agriculture

Written by adminMay 23, 2018

We’ve extensively covered all the news going down between China and the U.S. A trade war between the two economic superpowers is not a good idea for anyone. China knows that, as does the United States.

President Trump, once again, seemed to apply just enough pressure to get the outcome he desired. His first victory came over North Korea, who agreed to end the Korean War and step across the DMZ at the behest of Trump’s critics who warned his tactics would lead to a nuclear war.

Now, China also appears to be bowing to pressure from President Trump, agreeing not only to end threats of a trade war, but also to purchase “massive amounts” of agricultural products from U.S. farms.

China also agreed to sit down and create a new deal promising to address the massive trade deficit between them and the U.S., a problem President Trump has railed against since his campaign.

According to U.S. Treasury Secretary Steve Mnuchin, this increase in agricultural products should total an additional 40%, which is amazing news for farmers who were worried a trade war would severely hurt their income.

Stocks and Oil Prices

When news first broke that China and the U.S. were soon to be embroiled in a fight, it frightened a lot of investors. Stocks fell sharply after months of historic growth. Now that news of the trade war being behind them and new deals are in place, stocks rose early Monday morning, as did the price of oil.

For the first time since 2014, the price of oil hit the $80 per barrel mark.

OPEC and Russia agreed to cut supply, as well as promised economic sanctions on major oil producer Iran that has many experts believing we’ll see oil prices cross the $100 mark this summer, but now that the trade war talk is cooling, moods are shifting. Some of the pressure on the market is now going away.

“Both sides plan to work on implementing agriculture and energy purchases and to continue to negotiate on manufacturing and service trade, bilateral investment and intellectual property protection in coming months,” said U.S. bank Morgan Stanley.

Now that the U.S. and China are on the same page economically, it can only mean good things for both countries. Trump certainly has a way with getting things done, even if his methods make everyone else nervous.

Written by adminMay 14, 2018

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We all know how fickle gas prices are. I used to joke every time they rose that someone must’ve hiccupped in the Middle East.

When Trump decided this past Tuesday that it was time to end the Iran nuclear deal, we as Americans either supported or opposed it based upon our knowledge of the situation and political affiliations, but we didn’t think about the other ramifications this might play out – and one that could severely hit our pocketbooks.

Now, the important thing to know is this: this U.S. gets no direct gas import from Iran, but many of our allies do. These are the same allies who have blasted Trump in the past several days for his decision to cut the nuclear deal, probably more out of personal interest.

One country who holds a lot of cards in this situation is China. 1/3 of all of Iran’s gas output is guzzled by China, and where China falls in this whole situation will play a major role in future fuel prices.

In fact, if you haven’t noticed yet, the prices have already surged up merely on rumor of Trump’s well-guessed decision to cut ties with Iran. While it doesn’t directly tie in with where America gets its fuel, any drop in the global supply will ultimately ratchet up the prices.

With China being Iran’s number one customer, this doesn’t bode well for the relationship of the two countries who are already deadlocked in an impending trade war. The situation will become grave indeed if the Trump administration decides to impose sanctions on countries who continue to help Iran.

Our European allies, who also seem quite frustrated with Trump’s decision, also seem less likely to play along. But even if they do, undoubtedly to keep Trump happy, sanctions on Iran won’t be as impactful if the U.S. can’t get China on board.

The last time Iran was under sanctions before the nuclear deal was created by the Obama administration, Iran just churned out more oil to beat any economic hit they might’ve taken.

China went from buying 420,000 barrels per day to around 481,000 barrels. Just before the nuke deal was about to expire, they dramatically increased their imports to around 700,000 barrels per day earlier this year in expectation of the deal to fall through.

Recently, OPEC and Russia made a deal to cut oil supply, along with Venezuela and Saudi Arabia. The uptick in the U.S. economy means the demand for oil is back on, and now increased volatility in the Middle East may just create the perfect storm for another hot summer with higher gas prices.

Bank of America, along with other experts, are already predicting a return to $100 barrels of oil this summer, which will do nothing but put increased pressure on nearly every industry that is still recovering from the decade-long recession.

Written by adminMay 9, 2018

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One of President Trump’s big promises on the campaign trail was to reform the prescription drug industry. For most Americans, the cost of lifesaving prescription drugs is way too high.

We already know that these companies value profit over lives. All we have to do is look at the recent case of EpiPen, who raised the price of their pen to unfathomable levels.

The cost of epinephrine per box: $1
What EpiPen rose the price to: $699

Why did they do this? The answer is simple: profit. Despite the protests and the anger this caused, the manufacturers defended their position. They proved they didn’t care about the numerous people who depend on this product to save their lives.

This is just one example. It was such a huge issue that Trump vowed to lower the cost of prescription drugs. Why Americans wish he had tackled this problem sooner in his administration, it was finally announced that he will release his strategy this week.

Alex Azar, Trump’s Secretary of Health and Human Services, said that the president’s approach will be to take a ‘tough stance’ on drug makers. This declaration alone led to the stock of these major companies to fall.

According to Aetna, one of the country’s largest insurance providers, the cost of prescription drugs rose in price nearly 25% over the last four years, with the prices already been too high to begin with. This is why Trump made the cost of drugs an important issue during his campaign.

Here are some of the issues expected to be brought up in the coming days:

Price Rebates

When you look at the dealings between drug makers and insurance companies, you’ll start to see how they prop each other up. Drug companies will give large discounts to insurance companies, but many wonder if those same discounts are passed down to the consumer.

In most cases, they’re not. Trump’s plan hopes to change that by ensuring more of the discounts is given to the people, especially those on Medicare.

Promoting Increased Competition

President Trump continues to strongly believe that increased competition between drug companies will force them to lower the cost of drugs to stay competitive.

Once a new drug is released by a major manufacturer, generic drugs aren’t far behind, so the Trump team hopes to allow for faster review of generic drugs to get them into the market quicker.

For example, if a competitor to EpiPen kept the price at $1, then consumers have options and EpiPen is less likely to obscenely raise their prices.

They also plan to identify more drugs as over-the-counter medicines to make them easier to obtain without having to get a doctor’s prescription, saving consumers times and money.

These are just a few of the ways Trump plans to tackle the drug industry. We look forward to seeing what the rest of his ideas are in making prescription drugs cost effective for everyday Americans.

Written by adminApril 30, 2018

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After President Donald Trump announced he would place tariffs on steel and aluminum to spur on growth in the American markets, several countries freaked out and promised to retaliate with tariffs of their own.

Wall Street reacted accordingly as stocks dropped over 700 points in a single day to the news that the U.S. may soon be embroiled in a trade war.

The main concern has to do with the world’s two largest economies battling it out for supremacy, which would almost certainly leave other countries destabilized and fighting for air.

While the idea of a trade war is unsettling, there’s a chance that Trump isn’t too serious about keeping tariffs up for long. Instead, he might be pushing for better negotiations on a trade deal he’s touted since the campaign trail.

It’s a tactic that has proven to work so far.

All one has to do is look at the North Korea situation. Trump’s aggressive tone had many fearing that WW3 was about to break out any moment, but instead, it brought both sides to the negotiating table. For the first time in over 60 years, the Korean War has officially ended.

In an effort to avoid a trade war with China, a war the U.S. can’t afford to have as its economy recovers from a decade-long recession, Trump has sent a team of experts to Beijing with the goal of leaving with a compromise deal that helps both sides.

Trump tweeted last week that he believes a deal will get done, but some aren’t as optimistic. His team needs to be united on the tenants of the deal to make negotiations simpler, but those he did send don’t seem to be likeminded about what needs to get done. It consists of both free trade advocates as well as trade hawks…two sides who rarely agree on anything.

Chris Krueger, the managing director of the Cowen Washington Research Group, isn’t optimistic about the deal.

“This sets up a bizarre situation where the US team may spend most of the talks negotiating among themselves. It’s hard to picture more unique Trump officials.”

Trump himself believes sending a team with diverse ideas is a great thing, but one is left to wonder, with a recovering economy, if now is not the time to leave it to chance. This is the best chance we have at preventing a trade war, so sending a team that isn’t in agreement won’t be likely to solve the problem.

At the end of the day, a trade war can send the American economy back into a recession and destroy the massive positive movement we’ve seen under the Trump administration so far.

Hopefully the president’s aggressive tactics don’t lead us down that road.

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