gold stocks china tariffs

What Do New Tariffs Mean For Gold Investors?

In the past few months, we have witnessed a large number of tariffs wander their ways into the Chinese economy. Many analysts expect these tariffs to remain in place even after an election occurs in the U.S. There is currently a joint understanding that in the course of the next ten months, the U.S. could begin to reduce these tariffs altogether. This would be on imports worth an estimated $360 billion.

Currently, analysts state that we are in a period of review. This means that there is nothing that is concrete about these tariffs at the present point in time. But, the Trump administration is currently waiting to see whether or not China will adhere to the terms of this newest agreement. Of course, it is still very much up in the air.

What Do Investors Think?

This could be a positive or a negative for some. Officials recently added that they are working on an agreement that will span 86 pages. This agreement should come out at the same time as the signing of these new tariffs. The hopes are that the agreement would help cut the current duties even further.

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Steven Mnuchin, the Treasury Secretary of the U.S. added that “the only non-public component of the agreement is a confidential annex with detailed purchase amounts, which has been previously described.”

Mnuchin went on to state that “There are no other oral or written agreements between the U.S. and China on these matters, and there is no agreement for future reduction in tariffs.” While we wait to see how the current tariffs affect the economies of both the U.S. and China, it seems as though all we can do is watch the market in the next ten months.

New Tariffs: Good For Gold Stocks?

Following the Phase 1 initiation, the U.S. will hold 25% tariffs on roughly $250 billion in Chinese imports. There will also be a levy on another $120 billion. However, under the agreement, China hasn’t agreed to pinpointed reductions. But the country has committed to excluding certain U.S. goods from duties to meet preset targets within the deal.

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China will also boost its purchases of American farm goods. These are things like soybeans and pork. There will also be certain agreements on IP, tech, and currency. Though the U.S. President aims to start a Phase 2 deal right away, the timing might not be imminent.

The President said that the deal may not come to a conclusion until after the 2020 election. Given this uncertainty, it may create a great climate for safe havens as a means to hedge against geopolitical risk between now and November 3. This includes things like gold, gold stocks, and mining stocks in general.

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