As we noted in the previous part, 2018 has been a lackluster year for markets (QQQ). At the beginning of 2018, not many people predicted that 2018 would be a weak year. However, President Trump’s trade war and the Fed’s tightening led to pessimism in the markets. We also saw an inversion of the yield curve that stoked recession fears.
In January, President Trump imposed tariffs on solar panels and washing machines. However, the major escalation came in March after President Trump imposed a 25% tariff on US steel imports and a 10% tariff on aluminum imports. The broad-based tariff covered allies and foes. Several countries retaliated against the tariffs by imposing tariffs on the US. Some countries took a softer approach and talked to the World Trade Organization. US steel prices rose to multiyear highs after the tariffs were imposed.
The US-China trade war escalated when President Trump imposed tariffs on several Chinese goods. So far, the US has imposed tariffs on almost $250 billion of Chinese goods. US companies like Walmart (WMT) Amazon (AMZN) have opposed the tariffs on China. The tariffs would increase the prices for the goods that the companies import from China.
Along with the trade war, the crash in cryptocurrencies (NVDA) (AMD) like bitcoin was another key highlight in 2018. Bitcoin has fallen from almost $20,000 to $3,500 now. Read Warren Buffet’s Was Spot On with Views on Bitcoin to learn more about cryptocurrencies.
President Trump’s tweets have impacted the markets in 2018, which we’ll discuss in the next part.