Trump Delays Chinese Tariffs, is He Just Postponing the Inevitable?

NYSE: SPY | SPDR S&P 500 ETF Trust News, Ratings, and Charts

SPY – In this featured article, Trump’s postponement of Chinese tariffs is examined. Could the President be postponing the inevitable? Continue reading for more details.

Two weeks after Trump’s August 1st tweet stating he would impose a new round of tariff on Chinese imports starting September 1st  his lackeys were forced to backtrack delaying move until December 15th.  The pressure from a variety of businesses and advisors explained the new tariffs would hit U.S. consumers in the pocketbook.

Trump explained his reversal stating that he didn’t want to ruin Christmas by causing an increase in prices on popular gifts such as laptops, phones, clothes and basic toys.  Of course, this completely contradicts his repeated claim that China is paying for all the tariffs and America is doing great by collecting that money. But hey, whatever.

The holiday season is crucial to many retailers; hence the origin of the term Black Friday to signify when these businesses finally turn a profit for the year.

Stocks initially jumped and nearly reclaimed all the losses incurred from the initial tweet. But, the flip-flopping, backtracking and general lack of any decipherable long term plan has left companies, and investors, thinking the pain has merely been delayed. It might actually be setting up for a worse scenario down the road.

Emblematic of the situation was the price action in Best Buy (BBY), which was one of the worst-hit, dropping over 10% on Aug. 1, only to recover nearly all the ground on the retraction.

But what’s disconcerting, and possibly telling of more bad times to come, is that the stock is now lower than the initial downdraft.

On some level, I’m sure retailers welcome reprieve. But, investors clearly don’t view it as a solution.

The tariffs create a host of difficult decisions to make, including how much they can raise prices before consumers balk and how much they can let tariffs eat into their profit margins before investors start running for the exits.

The Trump administration keeps proving itself impulsive and unpredictable on trade-related matters. This most recent tariff delay simply serves as a reminder that it will continue to be so.

The retail industry is already trying to navigate an extraordinary period of instability and change, given the rise of e-commerce, the fall of once-ubiquitous chains and other shifts in consumer preferences, such as the rise of healthier eating and lifestyles. It’s unfortunate that they have to add erratic trade policies to their list of potential stumbling blocks.

 Stocks initially jumped and nearly reclaimed all the losses incurred from the initial tweet.  But, the flip-flopping, backtracking and general lack of any decipherable long term plan has left companies, and investors, thinking the pain has merely been delayed. It might actually be set up for a worse scenario down the road.

SPY shares were trading at $288.99 per share on Friday afternoon, up $4.34 (+1.52%). Year-to-date, SPY has gained 16.71%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Option Sensei

Steve has more than 30 years of investment experience with an expertise in options trading. He’s written for, Minyanville and currently for Option Sensei. Learn more about Steve’s background, along with links to his most recent articles. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SPYGet RatingGet RatingGet Rating

Most Popular Stories on

Upside Potential for This Bull Market?

The S&P 500 (SPY) is flirting with new highs once again. Thus a good time to ponder the upside potential for stocks into year end and then what is likely on tap in 2024. That is exactly what investment veteran Steve Reitmeister shares in the commentary below including a preview of his 11 favorite picks for today’s market. Read on below for more...

3 High-Performing Chip Stocks to Secure Today

The semiconductor industry is poised to thrive due to the extensive use of chips for applications across multiple sectors and favorable government initiatives. Amid this backdrop, it could be wise to invest in high-performing chip stocks Nikon Corporation (NINOY), Infineon Technologies (IFNNY), and Everspin Technologies (MRAM) now. Continue reading…

Rising Defense Demands Will Be a Boon for These 3 Industry Leaders

As year end approaches, we’ve seen a major change in the geopolitical conflict picture as larger scale confrontations draw out, and new confrontations involve larger, and more, players than over the past few decades. This uptick in real and potential nation state conflicts means the weapons of war and defense become larger, and demand for “big ticket” defense items is growing. Huntington Ingalls, BAE Systems, and Lockheed Martin are three very large defense contractors that should see benefits from increasing global instability as nation states hike defense spending.

UiPath (PATH) Earnings Unveiled: Software Stock Opportunity?

UiPath (PATH) is growing with continuous investments in AI. Moreover, PATH boasts an impressive earnings surprise record. So, is the stock worth buying as the company prepares to release third-quarter earnings? Read on...

How to Profit Using The Probabilistic POWR Pairs Process

An example of grabbing gains from comparative performance with a lower risk China pairs trade on BIDU/PDD.

Read More Stories

More SPDR S&P 500 ETF Trust (SPY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SPY News