U.S china tensions to reach another level

The game started first by the United States, when the U.S president Donald Trump put tariffs on many Chinese exports to the United States. China has also retaliated, and the bill reached billions of dollars of tariffs paid from U.S consumers’ pockets and many businesses who have lost a lot in both countries.    

The trade war has moved to a cold tech war. The United States started to feel fearful about the national security and the huge amount of U.S citizens data collected by Chinese big tech companies and apps. As a result the United States banned Huawei before and now has imposed restrictions on TikTok and WeChat.

Tensions right now have reached a geopolitical level, with the last visit made by U.S Health and Human Services Secretary Alex Azar to Taiwan, a high level diplomatic action that hasn’t been done since 1979.

China considers Taiwan as part of its mainland territory, and U.S should have taken permission from Chinese officials before doing such visit.

In addition, the United States is intended to sell $2.2 billion in weapons including tanks and missiles to Taiwan, despite protests from Beijing. An act that is expected to widen the gap and increase tensions between china and the U.S.

Lately the U.S has put legal sanctions on eleven Hong Kong officials, and the same act has been taken by china as a retaliatory measure against eleven U.S officials.      

Slower pace of recovery than previously anticipated

Continuous spread of the virus and the increase in the number of new infected cases in the United States has pushed many economists and analysis to review their outlook about the coming quarters.

The less than anticipated recovery in consumer sentiment, which is expected to last at slow level for a much extended period of time, may affect negatively many retail businesses that we have already seen many bankruptcies among them.

U.S consumer sentiment

Many small and medium businesses are facing liquidity difficulties with less direct support from the government and the hardship of running a constantly open business.   

This weighs on the third quarter GDP outlook and on the theory of the V-shape recovery.