Are President Trump and the US Losing the Trade War with China?

Are President Trump and the US Losing the Trade War with China? ## The market After seeing a massive sell-off in the fourth quarter of 2018, the broader market has managed to remain in positive territory in January so far. Investors’ high expectations resulting from US-China trade talks and the Fed’s more dovish tone could be driving these gains. Last week, the S&P 500 Index (SPY), the NASDAQ Composite Index (QQQ), and the Dow Jones Industrial Average rose 2.5%, 3.5%, and 2.4%, respectively. However, these indexes are in negative territory today. Let’s take a look. ## China’s surplus with the United States According to a recent Reuters report, “China’s trade surplus with the United States rose to $323.32 billion last year, the highest on record going back to 2006.” The amount was based on a customs data calculation done by Reuters, and it was 17.2% higher than China’s trade surplus of $275.81 billion with the United States in 2017. The report also added that China’s exports to the United States had registered an 11.3% year-over-year increase in 2018, while its imports had inched up 0.7% in the year. ## Trump’s trade war In the last couple of quarters, US-China trade relations have seen several ups and downs. The trade war between the world’s two largest economies, which was triggered by President Donald Trump, has taken a toll on investors’ sentiments. Large US companies General Motors (GM), Ford Motor Company (F), Apple (AAPL), and Tesla (TSLA) have warned investors about the negative impact of the trade war on their businesses. Earlier this month, Apple cut its fiscal 2019 first-quarter guidance, citing weakening Chinese sales due to China’s economic slowdown. The company also cited the US-China trade war as one of the reasons for its slowing sales in China. The trade war doesn’t seem to have benefited either China or the United States so far. Investors will likely remain on the lookout for any positive updates on US-China trade relations. In the fourth quarter of 2018, US companies General Motors, Ford, Apple, Netflix (NFLX), Microsoft (MSFT), Amazon (AMZN), and Qualcomm (QCOM) fell ~0.7%, 17.3%, 30.1%, 28.5%, 11.2%, 25.0%, and 21.0%, respectively. During the same quarter, Chinese companies Alibaba (BABA), Baidu (BIDU), and NIO (NIO) fell 16.8%, 30.6%, and 8.7%, respectively.