In fact, President Trump expanded the economic battle to other countries this week, by slapping new tariffs on Argentina, Brazil, and France.

This week, Trump said he plans to impose new tariffs on industrial aluminum and steel from Argentina and Brazil. He said he’d also ramp up tariffs on a variety of popular French imports to the U.S.

By increasing tariffs on imported goods such as steel, the president hopes to make good on his 2016 promise to invigorate American companies, according to Fortune. However, steel companies are struggling, with U.S. Steel reporting a third-quarter loss of $35 million.

The trade war goes global

President Trump announced by tweet on December 2, 2019, that the United States would impose a 25% tariff on steel and a 10% tariff on aluminum from Argentina and Brazil as well as a 100% tariff on $2.4 billion worth of French foods and products.

Argentina and Brazil had previously been excluded from steel and aluminum tariffs in 2018 when the U.S.  reportedly imported $2.6 billion of steel from Brazil and $700 million of steel from Argentina.

President Trump alleged in the Twitter thread that both countries manipulate their currencies, hurting the American economy. Experts have disputed this allegation, claiming that Argentina and Brazil are actually trying to strengthen their currencies against the dollar. Instead, the president could be taxing Argentina and Brazil because they’ve sold billions of dollars worth of soybeans to China, which has halved its soybean purchases from the U.S. according to Bloomberg.

France has also been caught up in the trade war. In July, 2019, France passed a law placing a 3% tax called the Digital Services Tax on big American tech companies that operate in France such as Facebook, Amazon, and Google.

Responding to this tech tariff at the NATO summit this week, the Trump administration suggested that it would tax $2.4 billion worth of French goods at 100%, which could double the price of French favorites like wine, cheese, and cookware in the U.S.

The French Economy Minister Bruno Le Maire alleged that this 100% tariff would elicit a strong response from the entire European Union. The European Union on the whole recently became subject to American tariffs on $7.5 billion worth of European products.

South Korea too

In January, 2018, the Trump administration imposed a 50% tariff on washing machines from South Korea and a 30% tariff on solar panels from China. The move followed a push by domestic manufacturers of both products to get U.S. trade officials to impose taxes on imports, as a way to protect them from international competitors.  

The trade war’s impact on the U.S. economy

The trade war is reportedly costing American consumers. With the current tariffs in place, American households will spend an extra $2,031 per year, according to the National Foundation for American Policy.

Additionally, though Trump’s steel tariffs initially boosted the industry in 2018 with the creation of jobs and an increase in steel prices, the manufacturing sector remained slow for the fourth consecutive quarter as of December 2019.

Farmers say they are struggling because of the trade war as well. Countries such as China are raising tariffs on American agricultural products in response to the United States’ increased tariffs on Chinese goods, which some agricultural experts say may cost American farmers.  For example, China bought 5.9 million tons of soybeans from the United States during the first half of 2019, less than half of the 13.4 million tons that China purchased in the first half of 2018.

Background on the Trade War

• A trade war is when countries start waging an economic battle with each other using tariffs. One country will put tariffs on another’s goods, and the other will retaliate in kind.
• Over the last 30 years, the U.S. has signed numerous trade treaties to avoid trade wars, including the North American Free Trade Agreement (NAFTA).
• Agreements like this reduced the threat of trade wars, in part by eliminating many tariffs on exported and imported products.
• The Trump administration has been able to raise tariffs because of Section 301 of the Trade Act of 1974. Section 301 states that the United States can raise tariffs on countries that violate trade agreements or demonstrate unfair trade practices.
• Since 2018, the United States and China have notably been taking turns raising tariffs on each other’s exports. In May 2019, the United States doubled tariffs on $250 billion of Chinese products and China responded by announcing tariffs on $60 billion of American products. Steel, soybeans, whiskey, lumber, and other products have been caught in the crossfire of the trade war.

The post The Trade War Isn’t Just About China appeared first on Stash Learn.

Commodities are the stuff of life. They’re also one of the building blocks of the economy, and they’re as old as time. They’re things like gold, steel, aluminum, oil and even food. Pork bellies and cattle, live and turned into beef. They’re also the unleaded gas in your car. The corn and sugar in your pantry.

All of these things are commodities. They’re all valuable, and that’s why people invest in them.

What are commodities?

Unlike some of the more esoteric elements of the economy, commodities are rooted in reality. They’re heavy, they fill up pallets, and sometimes they even smell and make noise. They’re more tangible than currency, and they’re certainly more earthy than that flashy new stuff called cryptocurrency. And they’re easier to understand.

Commodities are useful. People were trading in gold and wheat thousands of years ago. Why? Their value is undeniable. Gold is generally considered the safe haven for investment, because everyone has always recognized its value.

How are commodities traded?

Commodities are divided into several categories, including energy, metals, agriculture, meat and consumer goods. Energy includes oil and gasoline, both natural and unleaded. Metals include gold, silver, platinum and copper. Agriculture includes corn, soybeans and wheat. Meat includes hogs and live cattle. Consumer goods include cocoa, coffee, cotton and sugar.

Commodities are divided into several categories, including energy, metals, agriculture, meat and consumer goods.

In the U.S. the two largest commodity exchanges are in New York (of course, think Wall Street) and Chicago (which makes sense, considering the stockyards of “The Jungle,” by Upton Sinclair.) They are called the New York Mercantile Exchange, the NYMEX and the Chicago Mercantile Exchange, CME.

Why do people invest in commodities?

Here’s something else, to keep in mind: Commodities can act as hedge against inflation, according to some experts, since they tend to increase in value as inflation rises.

Inflation can have a negative impact on  other stocks. And as we wrote recently, fears about inflation have sparked some of the current market turmoil. So commodities can potentially work as a stabilizing position in a portfolio when other equities are particularly volatile.

How do people invest in commodities?

There are three primary ways to invest in commodities

You can buy the actual raw product. Cowboys still run cattle drives into Fort Worth, Texas and miners still extract gold from the depths of South Africa. But if you don’t feel like buying a ton of zinc on a pallet and trying to figure out how to unload it, there are other ways.

Some investors put their money in commodity futures. They may try to predict what will happen to the price of bacon a month or two down the road.

Others might invest in exchange-traded funds, also known as ETFs. They’re perhaps the most user-friendly tools for investors, since they act as baskets of commodities (such as pork bellies) which are traded as units on the market.

What are the risks?

Commodities can still be subject to volatility, caused by natural shortages, or even political uncertainty. President Trump and the U.S. Department of Commerce unveiled a blueprint recently that would impose a 24% tariff on all steel imports, and even steeper tariffs of 53% on steel imports from a dozen countries. This could spark fresh price swings in commodities markets.

Explain it to me: What’s a tariff?

Oil is also notoriously volatile, experiencing the worst spikes during its long history in 1979, when the unstable political situation in Iran disrupted the flow of petroleum, followed by an even worse spike in 1980 with the Iran-Iraq war. Oil prices spiked once again to their biggest peak ever in 2008, when hit $100 a barrel for the first time, due to a regional crisis.

Even something as simple as corn can be the plaything of the environment and politics. Remember when biofuels like ethanol were going to change the world? That was also in 2008, when corn prices spiked so dramatically from the ethanol boom that was blamed for driving up food prices in general.

Back in October, the CME Group in October started including the trading of bitcoin futures in its exchange. Is cryptocurrency the new commodity?

Not yet. The thing about commodities is that they’re rooted in the real world. And for investors looking to diversify, they can potentially have a place in your portfolio that can hedge against inflation and rising interest rates.

The post Jargon Hack: What are Commodities? appeared first on Stash Learn.

Valentine’s Day, as an annual romantic celebration, was invented by Hallmark about a hundred years ago to sell greeting cards. Since then, it’s expanded into a $20 billion industry. That’s how much people spend on Valentine’s every year, according to the National Retail Federation.

We break down Love Inc., by the numbers.

Gold

Gold, the key ingredient in wedding bands, has been in use since ancient times, as jewelry and also as money, because everybody recognized the value of the glinting, yellow metal. It has industrial uses as well, that have nothing to do with ornamentation. Your cell phone contains bits of gold. It’s also in cars, circuit boards, dental fillings and NASA space equipment.

All the gold in the world totals about 170,000 metric tons, if it were all gathered together in one place. If all the world’s gold were melted into a cube, that cube of solid gold would measure 20.7 feet to the side.

Americans eat $18 billion worth of chocolate per year, which amounts to 18 percent of the world supply.

So how much is gold worth? We normally weigh it in ounces, not tons, and it’s currently trading at about $1,300 an ounce. Gold is volatile, and it increased increasing 12% in December and January, before dropping to its current level, as the stock market roiled through its extreme sell-offs since last week, including the Dow’s biggest single-day point drop ever (down 1,175) on Monday.

With gold priced at about $1,300 an ounce, now might not be a bad time to buy a wedding band. Yet,  the price of gold has gone way down since hitting its peak in 2011 of $1,889.70 an ounce.

Fortunately most wedding bands weigh no more than 0.35 ounces. That little band around your finger doesn’t amount to much weight. But here we are, paying $300 to $3,000 for a wedding ring. Why? Because it’s “platinum”? No. It’s because of the sentiment.

But that pales compared to engagement rings, which can cost more than $6,000, on average. Remember, there’s no rule that says you have to spend that much. Or even that a ring must have a diamond at all.

Chocolate

Americans love chocolate. Those $5 heart-shaped Russell Stovers at Walgreens and those $125 gilded boxes of Godivas really add up to billions and billions of dollars of consumer spending.

Americans eat $18 billion worth of chocolate per year, which amounts to 18 percent of the world supply.

Valentine’s Day spending gets a big piece of that. We’re expected to spend about $1.8 billion on candy on February 14. And that includes a lot of chocolate hearts with gooey centers.

Where does all this chocolate come from? Big Chocolate is dominated by Nestle, a Swiss conglomerate, and Hershey and Mars Inc., and also Ferrero, the maker of Nutella.

One of the biggest business stories of the year so far is when Nestle sold $3 billion worth of candy brands, including Butterfinger and Babe Ruth to Ferrero. Chocolate is big business.

Weddings

Weddings are a $76 billion industry. There are more than 300,000 wedding-related businesses employing 1.2 million people and the industry is growing 2.8% every year.

How much does the average wedding cost? About $35,000, according to recent survey from The Knot, a site devoted to the wedding industry.

The venue where the wedding actually takes place gets the lion’s share of the take, about $16,000, followed by the band, who typically earn about  $4,000. Overall wedding prices vary widely depending on the location, with Manhattan being the most expensive, at $78,000. For those on a budget, Arkansas is the cheapest, but even in Little Rock the typical wedding costs $19,000.

That doesn’t even count the cost of the honeymoon.

The average cost of a honeymoon is harder to nail down, because it depends on the destination. A 2015 report from WeddingWire, a company that works in the wedding retail industry, puts the average honeymoon cost at about $3,882.

One classic honeymoon is the ocean cruise, and cruises are a big business, creating a $117 billion industry annually, according to the Cruise Lines International Association. How much does a cruise cost? A website for cruise line might list packages starts at $1,000 for two, but the travel guide Frommer’s says the average is closer to $4,000.

Remember: Food is included, but many times, the drinks are not

Starter homes

The term “starter home” seems to suggest something cheap purchased by newlyweds, in the hope that it will appreciate in value and they’ll someday sell up to something bigger. The median price of a home sold in the U.S. in December 2017 was $335,400, according to the U.S. Census. So a starter home is likely to  be cheaper than that, on average.

Hundreds of thousands of people are buying these lower-cost homes. In tracking real estate deals by price, the Census Bureau says that 18,000 units sold for less than $150,000 in 2017. Another 62,000 houses sold for between $150,000 to $199,999, and 187,000 abodes sold for between $200,000 and $299,999.

Beyond that, as the price of houses get more expensive, the number of buyers drops.

Who says you can’t put a price on love?

The post The Business of Valentine’s Day: Love Inc. appeared first on Stash Learn.

But perspective is always important.

In context of other big stock sell-offs, the most recent drop wasn’t as significant as, say, the beginning of the financial crisis in 2008, when markets shed about half of their value, losing some $30 trillion of wealth.

Fact: The market goes up and down

As stock returns have headed steadily upwards in recent few years, it’s easy to forget something important: The market is normally volatile, which means it’s subject to swings, and there will be good years as well as bad years.

In fact in the course of most years, some experts say it’s normal for markets to experience something called a correction, which is when indexes drop 10% or more from a previous high.

Here are some tactics to think about

Diversify

It’s never smart to put all your eggs in one basket. It’s a good idea to consider investing in a mixture of bonds, stocks, sectors, industries, and geographies. Maybe you have too much in technology-focused funds, or blue chips, or small cap companies. The world’s a big place, and there are ten economic sectors to consider. You can invest in clean tech, cybersecuirty, and healthcare, to name a few other options. You can also invest internationally, in emerging markets, Asia, and Europe.

Consider putting money in bonds.

As the stock market has scaled ever higher heights in the past year, it’s likely your portfolio may be over-allocated toward stocks, because that’s where the big returns have been. Bonds, which are essentially IOUs from the federal and local governments, as well as companies, are generally considered safer investments. Since the financial crisis, bond returns have been pretty muted, at about 2%. But with short-term interest rates going up, the interest rate on longer-term bonds appears to be increasing too. The yield on 10-year Treasuries, for example, has risen about 0.5% over the past year to about 2.85%.

It’s important to remember, however, that bonds have risks tied to interest rate increases.  When interest rates go up, the price of bonds falls.

Think about

These are hard assets including metals (think gold, silver and nickel), grains, livestock, and foods. Commodities can act as hedge against inflation, according to some experts, since they tend to increase in value as inflation rises.

Inflation can have a negative impact on stocks. And as we wrote recently, fears about inflation have sparked some of the current market turmoil.

Commodities, however, can be volatile. As they are based on real-world products, they can be more subject to shocks related to supply and demand.

Don’t panic, you’re an investor

It’s important to keep in mind that there is no way to eliminate uncertainty from investing completely. But with some planning, it’s possible to minimize the risks you face in the market.

The post The Market Dropped. Now What Do I Do? appeared first on Stash Learn.