Carlos Barria | Reuters
President Donald Trump welcomes Chinese President Xi Jinping at Mar-a-Lago state in Palm Beach, Florida, U.S., April 6, 2017.
The latest round of tariffs targeting U.S. and Chinese companies went into effect this week, and the market has so far maintained its highs.
But investment experts warn that you should not get lulled into a false sense of security.
While the tariffs levied on $200 billion worth of Chinese products are currently set at a rate of 10 percent, that could ramp up to 25 percent by the end of the year.
“The biggest question is do we get the 25 percent tariffs starting on Jan. 1 of next year,” said Ed Mills, Washington policy analyst at Raymond James. “Ten percent gets absorbed in a number of different ways; 25 percent does not.”
The staggered implementation is most likely a sign of the Trump administration’s strategy rather than a softening of its stance, Mills said.
“It’s better not to have a 25 percent tariff going into midterm elections and going into the holiday buying season,” Mills said.
Once we get beyond the midterm election, if this is not resolved, it will be difficult to stop a potential trade fight, Mills said.