ActivePaper Archive Q&A WITH KENDALL W. KING - Oklahoman, 7/19/2018

Q&A WITH KENDALL W. KING

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Kendall W. King is CEO of Castleview Wealth Advisors and author of the book “Abundance.”

Diversified investments and discipline offer protection in trade war volatility

Q: What is the trade war between the US and China?

A: The U.S. and China have been in a trade dispute over the past few months, due primarily to the perceived unfair economic balance held by China. Specifically, the Trump administration contends that China holds an unbalanced trade surplus and insists that China open its markets more to American companies. On July 6, the U.S. acted by announcing tariffs on $34 billion of certain Chinese products. China quickly retaliated with tariffs of its own on U.S. imports. The Trump administration escalated the dispute on July 10 by imposing tariffs on an additional $200 billion of Chinese products.

Q: How will a trade war impact the US economy?

A: Historically, tariffs have been detrimental for the U.S. economy. Most economists expect the recently imposed tariffs to have short-term negative consequences for both countries; however, they don’t predict lasting damage. The main concern in the short term is an overall price increase of goods purchased by consumers in both the US and China. Of course, no one knows how long this trade war will play out in the future, but both countries will likely continue to tweak tariffs and regulate trade to protect national interests.

Q: What does this trade war mean for investors?

A: There’s no crystal ball to know what will happen in the future. While this trade war isn’t likely to have a significant impact on the markets, greater volatility is possible in the near term. Current stock prices are a reliable indicator of future market impact, meaning the potential effect of political or economic events has already been factored in. It’s worth noting that U.S. stocks have fared much better than Chinese stocks through the duration of this trade dispute. While the S&P 500 has posted positive returns for 2018, the Shanghai stock market, China’s primary index, has declined by double digits this year. It’s unclear whether this U.S. outperformance will persist, but investors can protect themselves during uncertainty by diversifying among multiple countries and asset class types. While the markets may currently be volatile, the best thing to do is ignore the noise and stay disciplined with your investment plan.

PAULA BURKES, BUSINESS WRITER