It is fair to say that investors and observers of the economic and political scenes have seen nothing like Donald Trump in their lifetime. This is a man who has made it in business, lost everything, rose again from the ashes and repeated this on numerous occasions. He now finds himself as the president of the most influential country in the world and he is certainly making headlines. However, are concerns over Chinese trade warranted or simply short-termism at its worst?
The deal will be done
He does not use traditional negotiating methods, he is quite prepared to walk away from the table but Donald Trump knows that the US needs a trade deal with China. He has made his position clear, the playing field will be reset and the US will never find itself with such deep trade deficits ever again. Well, that may be a little strong but you get the message, the tide has turned and the US is not prepared to fund other countries going forward.
Stock market fluctuations
Those attempting to make short-term profits from Donald Trump’s decisions, whether this is on trade, the Mexican wall, political stand-offs or the budget, do so at their own risk. Donald Trump does everything in his own time, he will never be rush, does not like being pushed into corners and tends to overrun even his own deadlines. So, with that in mind is it any surprise to see significant fluctuations in stock markets as a consequence of short-term comments and concerns about the Chinese trade deal?
Fair trade now coming to the US
Whether the rest of the world likes it or not, the US has been running significant trade deficits with the vast majority of countries for some time. Donald Trump has already said he is waiting on the sidelines to talk to the UK once it leaves the European Union. We know that he will drive a hard bargain, he will look to open up agriculture and healthcare to US companies but can you really blame him?
Whether you like him are not, there is no doubt that Donald Trump does what he thinks is best for the US and the US alone. He is more than happy to play a part on the international scene but the days when the US continually bails out NATO and runs massive trade deficits may well be coming to a close. Some politicians don’t like this, his critics use it to try and bring him down as we saw with the Mueller report but he is not an easy man to topple.
Conclusion
Love him or loathe him, Donald Trump does what Donald Trump does best, rattles cages, upsets people but on the whole does tend to get things done. Recent stock-market volatility has been brought on by short-term traders looking to guess what the president will do next. If you were to predict his unpredictable moves then you could make some serious money. However, as many investors have found, his negotiating strategies vary wildly in the short term.
Perhaps the best returns are made by those who focus on the endgame, the target for Donald Trump which on this occasion is a trade deal with China. He knows the US needs a trade deal and China know they need the US as well. So, we are likely to find some common ground but the basis going forward will be significantly healthier for the US than it is today. Make no mistake about that!