Business China

What's Next For the US-China Trade War?

+86-020-2917 9715
WFOE Licenses

New month, new tariffs! To date, President Donald Trump and President Xi have been unable to reach an agreement, even after months of negotiating and renegotiating. Global markets plunged when 10% in tariffs were slapped on $300 billion worth of Chinese products at the start of the month.

At the moment, financial gurus are desperately trying to understand Trump’s endgame, and what he hopes to achieve by achieving nothing. Even though Trump has repeatedly advocated for fair and reciprocal trading with China where there are zero barriers, zero tariffs, and zero subsidies, he has worked to do the opposite.

Now, multinational corporations (MNCs) that are watching their profits fall away as costs increase and supply chains are hit hard. Wall Street has also seen a shaky month, as the average trading price of major stock markets fell by nearly 5 percent apiece over the past month.

open business bank account

China is now planning on weaponizing its currency to fight the trade war proactively. China’s currency, the renminbi, has been pegged at a constant seven for each US dollar for over a decade, but for the first time on Thursday, China’s central bank allowed it to be devalued. Trump took to Twitter to call out the drop and accused China of committing ‘currency manipulation.’

Analysts believe that the move is a direct result of new tariffs and that China is hoping to soften the blow on its economy while also provoking Trump in the process. This means two things: (a) China has abandoned all hopes of a trade deal with the US and (b) that the trade war is expected to drag on further, deepening the rift between the two countries.

If the yuan continues to drop, not only will China be helping its factories offset the costs of tariffs when selling products, but it will also evoke further rage in President Trump.

But that isn’t the only weapon that China has to dangle over the US. The $1 trillion owned by China in US Treasuries can trigger a mass panic if Beijing decides to fight dirty.

What Does This Mean For MNCs?

Overseas companies have seen a drop of 13.6 percent in their profit reports. Tariffs are hurting their revenue streams, but we still need to see more reporting over several years to see the actual impact. A CNBC article reports that earnings have been better than expected but multinationals have been hit the worst and it’s unlikely to get better.

What happens next is anyone’s guess. But in the meanwhile, you can rely on our expertise to help you maneuver through these hot waters. Whether you want to open a company bank account in Hong Kong or want help acquiring WFOE license, we can do it all.

Contact us here.

  • James Oliver "True professionals, very helpful and dedicated. Your support team is fantastic."
  • Robert Gatti "Our advisor was brilliant and we were given more help that we knew we needed. What I liked most about Business China's service was the prompt and businesslike approach.It helped us dramatically. At a...
  • Vivian Belfanti "Quality work and friendliness is why I chose to work with Business China. Business China is organized very easy to work with."
  • Tim Orchard "Thanks to Business China’s professional guiding and efficient processing about company incorporation and VAT refunding, our new entity in Guangzhou already step into a virtuous circle. I have to say...
  • Victor Declety "Business China allows us to focus on our customers instead of being tangled into enterprise level business incorporation and maintance."
  • Ben Hunter "Business China is helping people who don't necessarily know how to connect your current business with the booming Chinese market and how to lay out your 'China Dream' here specifically. It has been...
  • Daniel Wong "A great customer experience! The flexability and speed of response from the account manager, as well as the quality of the service process was exceptional."
  • Stacey Morris "Businesss China has been superb. Their customer service is great. The guys there respond very quickly and go above and beyond that help."
  • M. Salem Having real-time information allows us to deal with issues immediately before they become problems.We are satisfy with Business China.
Request a Proposal

Drop Business China a quick message to let us know about your incorporation needs.