US President Donald Trump and Canadian Prime Minister Justin Trudeau were all jokes and smiles for the media as they met at the Group of Seven leaders summit in Quebec on Friday, but neither budged on the serious trade dispute between them.

In light of Donald Trump’s dramatic withdrawal from the Iran Nuclear Deal, Katina Hristova examines how the pullout can affect the global economy.

As with anything that he isn’t fond of, US President Donald Trump hasn’t been hiding his feelings towards the Joint Comprehensive Plan of Action between Iran and the five permanent members of The United Nations Security Council plus Germany. Pulling the US out of the agreement on the nuclear programme of Iran, which was signed during Obama's time in office, is something that Trump has been threatening to do since his 2016 election campaign. And he’s only gone and done it. Earlier this month, he announced America’s immediate withdrawal, saying that the US will reimpose sweeping sanctions on Iran’s oil sector and that “Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States”. And as if this isn’t alarming enough, President Trump has also said that the US will require companies to ‘wind down’ existing contracts with Iran, which currently ranks second in the world in natural gas reserves and fourth in proven crude oil reserve, in either 90 days or 180 days. This would hinder new contracts with Iran, as well as any business operations in the country.

Since Washington’s announcement, signatories of the Iran Nuclear Deal, still committed to the agreement, have embarked on a diplomatic marathon to keep the deal alive. On 25 May, Iran, France, Britain, Germany, China and Russia met in Vienna in a bid to save the agreement.

So how will this hurt the global economy?

Deals worth billions of dollars signed by international companies with Iran are currently hanging by a thread. The main concern on a global scale is that the US’ decision threatens to cut off a proportion of the world’s crude oil supply, which has already resulted in an increase in oil prices, with crude topping $70 a barrel for the first time in four years.

Additionally, European companies like Airbus, Total, Renault and Siemens could face fines if they continue doing business with Iran. Royal Dutch Shell, who is investing in the Iranian energy sector, is potentially one of the biggest companies to be affected by Trump’s withdrawal which could put billions of dollars’ worth of trade in jeopardy. As The Guardian points out: “In December 2016, Royal Dutch Shell signed a provisional agreement to develop the Iranian oil and gas fields in South Azadegan, Yadavaran and Kish. While drilling is still a long way off, sanctions are likely to put any preparations already being made on ice.”

French company Total, who’s involved in developing the South Pars field, the world’s largest gas field in Iran, is in a similar situation.

Airbus and Boeing, two of the key players in the international aviation industry, have signed contracts worth $39 billion to sell aircraft to Iran. As The Guardian reports, the most significant deal is an agreement by IranAir to buy 100 aircraft from Airbus.

A spokesman from Airbus said that jobs would not be affected. “Our [order] backlog stands at more than 7,100 aircraft, this translates into some nine years of production at current rates. We’re carefully analysing the announcement and will be evaluating next steps consistent with our internal policies and in full compliance with sanctions and export control regulations. This will take some time”. Rolls Royce is also expected to be indirectly affected if Airbus loses its IranAir order, as the company is the key engines provider to many of those aircraft models.

Another European company that will be hurt by the sanctions announcement is French Renault and PSA, who owns Peugeot, Citroën and Vauxhall. When sanctions were lifted back in 2016, Renault signed a joint venture agreement with the Industrial Development & Renovation Organization of Iran (IDRO) and local vehicle importer Parto Negin Naseh, worth $778 million, to make up to 150,000 cars in Iran every year. This is one of the largest non-oil deals in Iran since sanctions on the country were lifted. Last year, local firm Iran Khodro also signed a deal with the trucks division of Mercedes-Benz, with car production scheduled for this year.

Iranian firm HiWEB has been working alongside Vodafone to modernise the country’s internet infrastructure, but it looks like the partnership will have to be reconsidered.

The consequences

The White House and President Trump appear aware of the danger that a rise in oil prices on an international level pose to the economic growth of the Trump era, however, they also seem ready to embrace the economic and geopolitical challenges that are to follow. Although the consequences of US’ Iran Deal pullout are not perfectly clear in the short term, they will undoubtedly become more visible as sanctions take effect. The deal has its flaws, however, completely withdrawing from it and threatening the US’ closest allies can only compound those issues and create new ones. It is hard to predict what will unfold from here and where Trump’s strategy will take us. The one thing that is certain though is that the world doesn’t need more hostility.

Is globalised trade in reverse? Is protectionism on the rise with the potential of a spreading trade war? These are questions at the top of many business leaders’ minds. The answer to both these questions is yes, and business models are going to have to change as a result. Dr Joe Zammit-Lucia, co-author of ‘Backlash: Saving Globalisation from Itself’, explains for Finance Monthly.

WTO figures already show a significant slowdown in the growth of international trade as a percentage of GDP. We are still only at the early stages, but a trade war and a stalling of globalized trade is almost inevitable.

This first part of the 21^st century has seen many shifts from the post-war global world order that we had all become used to and on which the trans-national business model has been built. These changes are significant, encompassing political, cultural and economic shifts that have upended old assumptions.

To cite but a few examples, global governance structures (WTO, IMF, World Bank, etc) were previously seen as fair arbiters of the global order. Now their governance structures are seen by developing countries as dominated by the West and by the developed world as no longer serving their interests.

‘World trade produces net benefits for all’ was the 20^th century mantra. Now it is clear that such benefits are very unevenly distributed with consequent economic, social and political implications. The free movement of global capital was seen as a vital fuel for growth and development. Now it is seen as potentially destabilizing, a system for hiding large amounts of illicit money, and a facilitator of tax arbitrage.

Low labour costs were seen as the competitive advantage of developing countries. Now they are seen as the basis of ‘unfair competition.’ Persistent trade imbalances were dismissed. Now we understand their corrosive effects on deficit countries.

In an information driven world, privacy and national security issues affect trade – from the manufacturing of routers to the security of data platforms, to building self-driving cars. For instance, Qi Lu of the Chinese tech company Baidu explains: “The days of building a vehicle in one place and it runs everywhere are over. Because a vehicle that can move by itself by definition it is a weapon.

But maybe most important is the major geopolitical shift. The post-war world order was characterized by Western dominance and overseen by the hegemonic power of the US. Now we have three more or less equally potent trading blocs – the US, China and its sphere of influence, and the European Union. Economists have known for decades that in such a structure, competition between blocs was much more likely than co-operation.

Trans-national business has played a role in these changes. A meaningful proportion of the US trade deficit comes not from ‘Chinese goods’ but from American goods that are being manufactured in China (the computer I am writing this on, for example). Businesses have long engaged in arbitrage between countries in investment, jobs and taxes, nurturing, over time, what has turned out to be a political time-bomb.

Neither can business leaders be blamed for such behaviour. They were doing their job: optimizing their business models. But times have changed. The rules of world trade need overhaul. And business models will have to change with them.

Some business leaders are already taking action. “The days of outsourcing are declining. Chasing the lowest labor costs is yesterday’s model” says Jeff Immelt of GE. “Now we have a strategy of localization and regionalization” states Inge Thulin of 3M.

It is also worth bearing in mind that the trade agreements that we have all become used to were developed in a world of trading largely in goods. They are poorly suited to trade in services, digital commerce and large financial flows.

It is tempting to dismiss talk of trade wars as a Trump phenomenon. Much bombast, little meaningful action, and something that will soon pass. That would be to misunderstand the slow but sure tectonic shifts – political, cultural and economic – that are happening.

How individual businesses react, or, preferably, pre-empt these shifts will determine their future performance. And they will determine whether the political consequences of their actions will, over time, smooth things out or make them worse.

Over the past several weeks, insolvency and companies facing severe cash flow issues have hit the headlines. Carillion announced their liquidation in early 2018, becoming the largest insolvency procedure of the year. Quickly following suit, Toys R Us and Maplin announced their failure to negotiate payments with creditors, and both retail companies have now entered the administration process. Only several weeks later, New Look, announced plans to close 60 stores as part of their CVA, with agreements in place with their creditors. Similarly, Grainger Games closed all 67 of their stores abruptly, as multiple investors pulled their credit offerings.

The recent headlines have only highlighted the necessity of carefully analysing your cash flow, and that of your clients. While it’s not always clear if a client is failing, there are several signs indicating a company’s financial health. The warning signs act as evidence of potential trouble. Business Rescue Expert, leading insolvency practitioners in the UK, are sharing the indicators your clients may be in financial distress.

1. Poor communication

Poor communication is a significant indication of financial distress. Should your clients no longer return calls or answer emails, it is a strong indication that something is not right. If you happened to enjoy an amicable business relationship, yet cannot get in touch with management regarding invoices - you should look into formal proceedings.

Alternatively, look to see how the company corresponds when you do get hold of senior management. If their tone is more formal than previous, it could signify they are undertaking legal proceedings and, possibly, looking for alleged breaches of contract.

2. Disputing invoices

Further to the above point, your clients may attempt to avoid payment by raising invoice disputes. These disputes could relate to issues with performance, stock etc. and could be an attempt to shed unprofitable contracts to save payments. Again, the tone of their correspondence could suggest something is wrong with your clients, and they could be preparing a trail of evidence. Disputing their invoices also provides the company with a little breathing time, so you should be wary of clients disputing invoices where there doesn’t appear to be clear issues.

3. Loss of reputation

Reputation is critical to the success of business. A fall in reputation - especially when it comes to payment - should set off several alarms. If you hear the company is losing trust with other clients, it’s time to sit down and get to the root cause of their issues. A huge loss in reputation can often prove irreversible, as it takes time and investment to gain back consumers trust.

Toys R Us is a prime example of a company losing reputation. Initially, Toys R Us entered a CVA, but failed to pay the debts owed at the time agreed. Subsequently, the damage of their reputation with creditors led to them entering administration.

4. Relaunch and rebranding

You should always be wary of companies rebranding every so often, under similar names. Alarm bells should ring as to why they have had to sell and rebrand previously. Is the rebrand just plastering over the initial cracks of the cash flow issues? Likewise, if a company relaunches yet offers the same trade to their consumers, without any extra income, it’s more than likely they will continue to face the same problems. In the worst case, your company could suffer a loss of reputation due to the association.

5. Low staff morale

Staff mean the difference between success and failure, and companies should always take care of their workforce. A company who doesn’t and boasts a massive turn around is instant trouble, and a huge indicator of potential cash flow issues. More often than not, staff will get a feel for cash flow issues before creditors - particularly those within the sale team. If there happens to be a feel of unease, or a high number of resignations, you can expect cash flow issues are at the heart.

6. Senior staff resignations

A sharp indicator of what is to come is senior staff resignations. If directors are leaving the sinking ship, you need to ask why. Likewise, if directors are under investigation, something is very wrong with the company. If those in charge of the company’s finances have resigned, it may be as this is their only option. We urge you to take note of these departures and, if it continues, seek immediate advice.

7. Clients refusing to trade with the company

If you have spotted any of these signs with your clients, you must speak to professionals immediately to discuss your options. We suggest attempting to communicate with your client to establish the cause and, perhaps, set out a payment plan. You can also track their company progress or obtain accounts through Companies House.

Most conversations about doing business in Africa will include words such as “challenges,” “instability” and “risk.” Nat Davison, Partner at foreign exchange and international payments firm, Frontierpay, explains for Finance Monthly the promises and pitfalls behind payments across the African continent.

The same three words are often applied to managing currency risk and making payments throughout Africa. Costly transmission fees, unestablished banking systems, central bank restrictions and market volatility are all obstacles keeping treasury managers and payroll teams up at night.

That said, Africa also has a lot to offer from a payments perspective. The continent is becoming a hub of new payments technology, same-day payments are possible in countries such as Nigeria and there is a booming mobile payments landscape.

In short, while there is some volatility, if payroll teams are aware of the potential pitfalls and how best to avoid them, there are plenty of rewards to be reaped in the continent.

Finding the right supplier

When looking at currency markets, risk is a constant. Before even considering how currency fluctuations could affect your business though, you first need to gain access to any of Africa’s local currencies; a process which isn’t always as straightforward as it might sound.

In an ideal world, a single supplier would be able to meet most, if not all, of a business’ currency requirements. The reality though, is that many high street banks have a limited or restricted offering and are unable to provide a solution that covers multiple African nations. It’s important, therefore, when preparing to do business in the continent, to find a partner who can cover as many currencies as possible. Not only will this help to smooth internal processes, but it will also enable more effective currency hedging.

Companies often try to get around liquidity limitations in Africa by making payments in US dollars instead. The problem in doing so is that unless the beneficiary bank account is denominated in USD, the payment will be converted to the local currency before crediting at an arbitrary and more than likely unfavourable rate of exchange. Furthermore, it’s impossible to pay a supplier or employee a fixed amount using this system.

Currency volatility

Markets can be fickle beasts and to use even a commonly traded currency such as the South African rand can require a thick skin and heightened awareness of risk. Last year, the currency dropped 7.5% in the last four days of March, only to rise by the same amount in a nine-day stretch in April. Shifts of this nature are more than capable of affecting your payment costs and can hit with little warning.

On the flip-side, anyone with the nerve to have played the rand over the long term will have seen a downward slide of more than 50% in its value between 2011 and 2015, only for it to rise by 13% in 2016 and outperform every EM currency except Brazil’s real and Russia’s rouble.

To remove a degree of the uncertainty from trading the rand, I would advise anyone who hopes to do business with South Africa to have an understanding of the carry trade; a strategy that involves borrowing a currency with a low interest rate in order to fund the purchase of another with a higher rate.

Payment risk

As a result of the combined political and currency volatility in the region, knowledge and experience of South Africa’s local markets are key to successfully negotiating the pitfalls that could cost you time and money.

Where possible, work with partners who can demonstrate a strong track record and broad network within the region, to speed up the delivery of payments and avoid overblown fees. Some banks and payment partners may be able to deliver funds to Nigeria, for example, but not all will have access to local banking systems. Having this capability would open up the possibility of naira crediting bank accounts within hours rather than days.

Pricing is affected in the same way. A deeper knowledge of local market conditions, parallel markets and FX volatility will allow you access to much more favourable currency rates and the most efficient processes available within the rapidly developing continent.

Banking requirements are also fluid, with differing beneficiary data needed in different countries – in stark contrast with the EU and Single European Payment Area. Specialist experience when it comes to making payments in less-developed regions, such as Mozambique or Lesotho, will help to avoid lengthy delays, payment rejections and administration charges.

Volatility in Chinese economy

Africa’s prosperity increasingly depends on China. Over the past 20 years, China has become its largest trading partner and a significant source of investment and lending, paving the way for deep economic ties between the two countries.

As a result, recent signs of a slowdown in the Chinese economy are likely to be a very bad omen for Africa, which is massively dependent on China to not only purchase its natural resources, but also to upgrade its decaying national infrastructure.

Ultimately, a slowing China will hinder Africa’s ability to grow. However, as a decelerated China is looking ever more like an inevitability than a possibility, any business with exposure to Africa must ensure they are monitoring the landscape in China just as closely.

In conclusion

As a market to do business in, Africa is gathering global interest. Widespread urbanisation is fostering large cities in which to set up shop and readily available workforces to recruit from. New consumer markets, such as a growing middle class, are presenting previously untold opportunities to trade and the region is seeing strong growth, both economically and from a perspective of technological innovation.

However, for any new business, success on the currency and payments front needs to be an immediate concern. Failure to manage currency risk can fundamentally jeopardise your business, while holes in your liquidity provision may even leave you unable to pay suppliers or employees. Familiarise yourself with your required currencies and the local banking infrastructure, and invest time in finding a partner with the knowledge to keep any potential risk under control.

Forex trading can offer an efficient way of building real wealth. However, it comes with its risks. A few mistakes can end up costing you real money, not just time and effort. Luckily, Adam Truelove, Global Trading Director at Learn to Trade, has some tips on what to avoid.

Forex trading for beginners can be fraught with dangers, but by laying out examples of what you shouldn’t do, we can hopefully make the path ahead a little safer for you. Here are some common mistakes beginners make that you should avoid, to make your trading as low risk as possible.

1. Lack of direction

It’s no secret that the Forex market can be highly unpredictable. It is vital to not confuse this ‘unpredictability’ with ‘randomness’ as many beginners do. Often people start by going on to trade as randomly as they believe the market to be. Sometimes they win, sometimes they lose, but they never learn how to do either reliably. You have to learn to react to the volatility of the market, not give into it.

So, how do you work your way through the seeming madness of it all? The first step (and most crucial) is to have a trading plan.

Another important part is learning from the losses that you’ve made in the past and why they happened. The best way to do that is to record them in a journal. By keeping tabs on every trade you make, you will start to notice where it isn’t performing as well as it should be, or other factors are influencing outcomes. Having this plan and being able to change it based on the results is vital in Forex trading.

2. Not having a stop-loss

A stop-loss is an order designed to stop you from losing too much money on any one trade. It is an essential part of Forex trading and the longer you go without it the more you leave yourself open to risk. You should decide how much you’re willing to lose on any one trade and assign your stop-loss order accordingly. Just as importantly, you should avoid moving your stop-loss order just because your instincts tell you that one trade is eventually going to be a winner. Always let your head rule your heart, and never allow your emotions to make trading decisions for you. Everyone will experience some loss when trading; but by putting in place a stop-loss you are protecting yourself from losing too much, too quickly.

3. Averaging down and selling early

Trading is not just a numbers game, it’s a game involving your own emotions and instincts. Nowhere is this clearer than in the very common mistake of averaging down. Although this error is more common in the trading of stocks and shares, it is important to understand why it is a bad idea for beginner traders.

Averaging down is the practice of adding additional funds to a trade that you’ve already invested in at a lower rate than you initially purchased. You might do this because you have already invested in a trade, and you decide that it would be best to invest more while it’s cheap, and wait for the value to go back up. This is a sunk-cost fallacy, and you may be waiting a long time for any return, missing out on more profitable opportunities in the meantime.

4. Not diversifying enough or diversifying too much

Overtrading is a very common mistake that exposes many beginners to too much risk. By doing this, you are not insulating yourself from the market, in fact, you might as well be trading randomly. You should only trade when you think you have the advantage, and ensure you always trade according to your plan. An even larger risk for beginners, is over-diversifying by trading too many positions at the one time. By doing this, you leave yourself open to market risk, making it much harder to spot which positions and trades work. This also increases your risk of trade duplication, and overlapping positions, which can effectively double your losses on a bad trade.

Trading too much of your capital is another easy mistake for people to make. By risking large amounts of capital, you are likely to lose out in the long run because you have exposed yourself greatly to market risk. By mitigating your risk you can spread out your capital. Investing a maximum 2% of your total capital loss strategy rule, protects you from losing too much too quickly, when the market works against you.

Forex trading for beginners is a long learning process. It’s best to make sure you’re doing plenty of research, taking advantage of demo accounts and learning the markets, before you start depositing real money. Through your efforts, you can make Forex much less risky.

With the ongoing spat between the United States and China, which seems to be only getting uglier, Katina Hristova explores the history of trade wars and the lessons that they teach us.

Trade wars date back to, well, the beginning or international trade. From British King William of Orange putting steep tariffs on French wine in 1689 to encourage the British to drink their own alcohol, through to the Boston Tea Party protest when the Sons of Liberty organisation protested the Tea Act of May 10 1773, which allowed the British East India company to sell tea from China in American colonies without paying any taxes – 17^th and 18^th century saw their fair share of trade related arguments on an international level.

Boston Tea Party/Credit:Wikimedia Commons

Trade wars were by no means rare in the late 19^th century. One of the most infamous examples of a trade conflict that closely relates to Donald Trump’s sense of self-defeating protectionism is the Smoot-Hawley Tariff Act (formally United States Tariff Act of 1930) which raised the US already high tariffs and along with similar measures around the globe helped torpedo world trade and, as economists argue, exacerbated the Great Depression. As a response to US’ protectionism, nations across the globe began striking each other with an-eye-for-an-eye tariffs – countries in Europe put taxes on American goods, which, understandably, slowed trade between the US and Europe. As we all know, the Depression had an impact on virtually every country in the world – resulting in drastic declines in output, widespread unemployment and acute deflation. Even though most countries began to recover between 1932 and 1933, the world was hit by World War II shortly after that. In 1947, once the war was over, the World Trade Organisation (WTO) was established - in an attempt to regulate international trade, strengthen economic development and hopefully, avoid a second global trade war after the one from the 1930s.

Schoolchildren line up for free issue of soup and a slice of bread in the Depression/Credit:Flickr 

Another more recent analogy from the past that could be applied to the current conflict between two of world’s leading economies, is the so-called ‘Chicken War’ of 1963. The duel between the US and the Common Market began when European countries, feeling endangered by US’ new methods of factory farming, imposed tariffs on US chicken imports. For American poultry farmers, the Common Market tariffs virtually meant that they will lose their rich export market in West Germany and other European regions. Their retaliation? Tariffs targeting European potato farmers, Volkswagen campers and French cognac. 55 years later, as the Financial Times reports, the ‘chicken tax’ on light trucks is still in place, predominantly paid by Asian manufacturers, and has resulted in enduring distortions.

President Trump may claim that ‘trade wars are good’ and that ‘winning them is easy’, but history seems to indicate otherwise. In fact, a closer look at previous examples of trade conflicts seems to suggest that there are very few winners in this kind of fight.

For now, all we can do is wait and see if Trump’s extreme protectionism and China’s responses to it will destroy the post-World War II trading system and result in a global trade war; hoping that it won’t.

There has been a lot of recent news regarding trade tariffs, as America and China impose a number of greater tariffs on a wide range of each other’s goods. Is this all political showboating though, or do they actually have an impact?

Trade tariffs were introduced to increase the ease and competition, while decreasing the costs of shipping goods abroad. This has been a great source of growth for international business and globalisation, yet there are concerns that it isn’t always beneficial to everyone involved.

The Role of Trade Tariffs

According to the World Trade Organisation (WTO), trade tariffs are customs duties or taxes on merchandise imports. This provides an advantage to locally produced goods over those which are imported therefore, while those sourced from abroad help raise greater revenues for governments. Countries can set their own trade tariffs and change these when desired, though this can result in tense political situations when tariffs are called into question.

Trade tariffs are used to protect developing economies and their growing industries, while they can be used by advance nations too. These are a few common roles for trade tariffs:

• Protect jobs: Imported goods can threaten domestic jobs and industries, especially if they’re produced cheaply abroad. Domestic firms may then cut jobs to save on costs, with higher unemployment leading to political unrest. Trade tariffs can be used to create a more level playing field.
• Consumer concern: Especially when importing foodstuffs, if one country is worried certain products may be contaminated they can levy a tariff to reduce the risk.
• Political retaliation: When countries believe trading partners haven’t been fair, played by the rules or there are other political differences, they can increase tariffs. This could mean the other nation then retaliates by levying tariffs too. If tensions ease off, then it’s likely any increases will be reverted.

There are many examples throughout history where trade tariffs have been used in many such ways, and they’re still being implemented as political weapons today. That alone suggests that they do work.

Price Impact

In the simplest terms, trade tariffs increase the price of imported goods. It means that domestic companies don’t need to increase their prices to compete, though this does allow some businesses that wouldn’t exist in a more competitive market to continue running. Without trade tariffs it would be something of a free border for goods, that could see high levels of unemployment in some countries with low production levels.

Trade tariffs can also be used to help limit volume too, by raising them to tempt consumers to stick with domestic goods and slow down the amount being exported if businesses are priced out. The higher the tariffs the less likely businesses in overseas countries are likely to export.

Benefits of tariffs can help governments raise revenues, especially in times of need, while for domestic companies they benefit from less competition. When tariffs are levied many domestic businesses can really benefit in these times. However, for consumers and businesses that rely on importing certain materials or goods, such as steel for production, the price can become inflated due to tariffs. There are constant shifts in benefits, with consumer consumption often lowered with higher tariffs for the short term, for example.

America’s Trade War

The changing global economy means that businesses need to implement key strategies to deal with such shifts, as explained by RSM. A great example of how the global economy is changing is with a step towards deglobalisation, best demonstrated by President Trump’s ideas of protecting and improving US manufacturing by adapting tariffs and effectively starting a trade war with China.

This started in early March 2018 when the USA imposed a 25 per cent tariff on the imports of steel entering the country. Such a move was designed to protect the US steel industry but has impacted upon the stock market and China, along with over 1,000 more tariffs, which is the USA’s biggest trade partner.

However, history has shown that trade wars for the USA aren’t always successful, with one in the 1930s excelling the Great Depression to increase unemployment levels to 25 per cent of the country. Whether this latest attempt works or not remains to be seen. Either way, businesses need to employ flexible strategies to prepare for many of the globalisation issues which could affect or destabilise the world’s economy in the future.

Beijing recently retaliated the US’ extensive list of around 1,300 Chinese products it intends to slap a 25% tariff on.

The White House claims the intentions surrounding these tariffs are to counter the ‘unfair practices’ surrounding Chinese intellectual property rights.

In response, China has escalated the trade war to an extent none expected, targeting over 40% of US-China exports.

However, the question is, will these tariffs, from either side, affect the backbone of their nation’s economy? What else might be impacted in the long term? This week’s Your Thoughts hears from the experts.

Roy Williams, Managing Director, Vendigital:

In order to mitigate the impact of tariffs and maintain profitability, it is essential that businesses with global supply chains give thought to restructuring their operational footprint and where possible, pursue other market or supply chain opportunities.

With China warning that it is ready to “fight to the end” in any trade war with the US, UK businesses should be in preparing for a worst-case scenario. In addition to China’s threat to tax US agricultural products, such as soybeans being imported into the country, the EU has warned that it may be forced to introduce tariffs on iconic American brands from US swing states, such as oranges, Harley Davidsons and Levi jeans.

In order to minimise risk and supply chain disruption, businesses that trade with the US should give careful thought to contingency plans. For example, importers of US products or raw materials should review supply chain agility and may wish to consider switching to alternative suppliers in parts of the world where there is less risk of punitive tariffs.

On the other hand, for exporters from the UK looking to reduce the impact of tariffs, it will be important to focus on the cost base of the business and consider diversifying the customer base in order to pursue new market opportunities. To a certain extent, this is likely to depend on whether businesses are supplying a commodity item, in which case the buyer will be able to switch to the most cost-effective source. If a buyer does not switch it may indicate they have fewer supply options than the supplier may have thought.

Businesses with products involving high levels of intellectual property and high costs to change are likely to hold onto their export contracts. However, they could face negotiation pressure from their customers. They should also bear in mind that barriers to change will be lost over time and customers can in almost all cases find alternatives, so preparation is key.

Access to reliable business management data can also play an important role in mitigating risk; helping firms to identify strategic cost-modelling opportunities and react swiftly to any new tariffs imposed. In this way, enabling businesses to access real-time data can help them to continue to trade internationally, whilst keeping all cost variables top of mind.

While a trade war would undoubtedly introduce challenges for businesses with global supply networks, it could nevertheless present opportunities for those that are well prepared. For example, with prices of Chinese steel likely to fall dramatically, UK importers of steel could consider striking a strong deal before retaliatory trade measures are introduced.

George S. Yip, Professor of Marketing and Strategy, Imperial College Business School, and Co-Author of China’s Next Strategic Advantage: From Imitation to Innovation:

The US has had huge trade imbalances with China for years. So why retaliate now? Yes, President Trump is a new player with strong views. But it is no coincidence that the US is finally waking up to the fact that China is starting to catch up with it in technology. This catch up has many causes:

• The huge investment by the Chinese government in fundamental and applied science and technology. For example, China now has the world’s largest supercomputers and its many declared science objectives include dark matter, artificial life, and nanoscience.
• The return to China of Western trained scientists, lured by both government incentives and economic opportunities. For example, Royole, a Chinese world leader in flexible display was started by Bill Liu, a Stanford PhD in electrical engineering, who chose to return to China to set up his new company partly because of the massive presence of automakers, a primary customer group.
• Chinese companies have learned from their Western joint venture partners, partly because of the enforced transfer of intellectual property to which President Trump is objecting. The sky is literally now the limit for China, having launched a mid-sized passenger jet to compete with Airbus and Boeing.
• China’s huge home market as well as its enormous exports now support investment in R&D that can be rapidly monetised via commercial products. Even Japan, in its heyday, failed in its attempt to challenge Airbus and Boeing.
• Chinese companies are now using their financial power to acquire Western companies for their technology. For example, in 2016, Midea acquired Kuka, one of Germany’s leading robotics companies, much to the anguish of the German government. The economic ideology of most Western governments means that Western technological crown jewels are mostly unprotected from foreign acquisition.

So, it is no surprise that the US tariffs apply mostly to technology-based Chinese exports such as medical devices and aircraft parts. In contrast, China is retaliating with tariffs primarily on US food products. While such tariffs will hurt politically, they will not hurt strategically.

Rebecca O’Keeffe, Head of Investment, interactive investor:

President Xi’s speech overnight appears to have struck the right tone, providing some relief for investors who have been buffeted by the recent war of words between Trump and China over trade. While there was already an overwhelming sense that Chinese officials were keen to achieve a negotiated settlement before the proposed tariffs do any lasting damage to either the Chinese or US economies, today’s speech was the clearest indication yet that China is prepared to take concrete steps to address some of Trump’s chief criticisms. The big question is whether President Trump will now take the olive branch offered by Xi’s conciliatory approach and dial down the rhetoric from his side too.

Corporate profits have taken a back seat to trade tensions and increased volatility over the past few weeks, but as the US earnings season starts in earnest this week, they will take on huge significance. Equities received a huge boost when the US tax reform bill was signed into law in December and investors will want to see that this is feeding through to the bottom line to justify their continued faith. A good earnings season would do a lot to regain some equilibrium and provide some much-needed relief and calm for beleaguered investors.

Richard Asquith, VP Indirect Tax, Avalara:

Last week’s Chinese tariff escalation response to the earlier US import tariffs threat was far stronger than many would have expected. It now looks likely that the world’s two most powerful countries, and engines of global growth, will enter a tariff war by June.

China’s retaliatory tariff threat last week is targeting products which account for about 40% of US exports to China. However, the US had only singled out Chinese goods accounting for 10% of trade. This makes the next move by the US potentially highly self-harming since, if it matches China, it will mean big US import cost rises on foods and other key Chinese goods. It will also mean less vital technology access for China.

The Chinese have also shrewdly singled out goods produced in the Republican party’s heartland constituencies. This will close the US government’s options on further measures. The Chinese have also refused to enter into consolation talks in the next few weeks until the US withdraws its initial tariff threats. This type of climb-down is unlikely to be forthcoming from the current US administration.

Whatever the outcome, China is now seeking to paint itself as the champion of globalisation and liberalisation of markets. It has already offered lower import tariffs on cars, taking the sting out of US claims of unfair protections to the domestic Chinese car producers.

This all means that we are in a stand-off, and the proposed tariffs from both sides are locked in for introduction in the next two months. This could be hugely damaging for a global economy recovery that is, after many years turgid performance, looking very positive. Global stock markets are already in flight at the prospect of no quick resolution and the fear of a reprise of the calamitous 1930s Smoot–Hawley Tariff Bill escalation.

We now have to see which side will blink first.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

China's Belt and Road Initiative is the most ambitious infrastructure project in modern history. It spans over 60 countries and will cost over a trillion dollars. The plan is to make it easier for the world to trade with China, by funding roads, railways, pipelines, and other infrastructure projects in Asia and Africa. China is loaning trillions of dollars to any country that's willing to participate and it's been a big hit with the less democratic countries in the region. This makes the BRI a risky plan as well. But China is pushing forward because its goals are not strictly economic, they're also geopolitical.

March started off with a bang when US President Donald Trump announced that his administration will impose steep tariffs on imported steel and aluminium in order to boost domestic manufacturing, saying that the action would be ‘the first of many’. This has brought about threats of retaliation by a number of the main US allies and the fear that Trump’s extreme protectionism may destroy the post-World War II trading system and result in a global trade war. Claiming that other countries are taking advantage of the US, the 45^th President seems confident about the prospects of a global trade war, tweeting: ‘Trade wars are good, and easy to win’ a day after his initial announcement. Although the tariffs are stiff, they are considerably small when seen in the context of US economy at large. However, the outrage that his decision has fuelled and the fact that China has already taken steps to hit back signal global hostility and economic instability.

The Response

Donald Trump’s decision from the beginning of March was followed by a chain of events, including the EU publishing a long list of hundreds of American products it could target if the US moves forward with the tariffs, the US ordering new tariffs on about $50 billion of Chinese goods and China outlining plans to hit the United States with tariffs on more than 120 US goods. In an attempt to soften the blow, the White House announced that it will grant exemption to some allies, including Canada, Mexico, the European Union, Australia, Argentina, Brazil and South Korea. Trump gave them a 1 May deadline to work on negotiating ‘satisfactory alternative means’ to address the ‘threat to the national security of the United States’ that the current steel and aluminium imports imposes. Trump said that each of these exempted countries has an important security relationship with the US. He also added:  “Any country not listed in this proclamation with which we have a security relationship remains welcome to discuss with the United States alternative ways to address the threatened impairment of the national security caused by imports of steel articles from that country”.

China vs. the United States

China is one country that is not listed. However, by the looks of it, China is not a country that will be discussing “alternative ways to address the threatened impairment of the (US) national security”. Instead, they fire back. China is the main cause of a glut in global steel-making capacity and it will be hardly touched by the US’ import sanctions. However and even though they do not want a trade war, they are ‘absolutely not afraid’ of one. Following Trump’s intentions for tariffs on up to $50 billion of Chinese products and the proposed complaint against China at the World Trade Organization (WTO) connected to allegations of intellectual property theft, China's Ministry of Commerce said it was "confident and capable of meeting any challenge”.

In response to Trump’s attacks, the Asian giant published its own list of proposed tariffs worth $3 billion, which includes a 15% tariff on 120 goods worth nearly $1billion (including fruit, nuts and wine) and a 25% tariff on eight goods worth almost $2 billion (including pork and aluminium scrap). Despite their actions, China’s Commerce Ministry urges the US to ‘cease and desist’, with Premier Li Keqiang saying: "A trade war does no good to anyone. There is no winner."

Is Trump going to win?

During his presidential campaign, one of Trump’s promises was to correct the US’ global imbalance, especially with China, however, it seems like his recent actions are doing more harm than good. Even if his tariff impositions result in a few aluminium smelters and steel mills in the short term, they risk millions of job losses in industries that rely on steel and aluminium; potentially endangering more jobs than they may save.

A country’s trade patterns are dictated by what the country is good at producing. China is known to be the world’s largest producer of steel, whilst steel is simply not one of the US’ strengths. Steel produced in America is 20% more expensive than that supplied by other countries. Naturally, it makes sense for US-based manufacturers to prefer buying their steel from overseas. Once Trump’s suggested tariffs are added onto steel and aluminium shipments from abroad, they will worsen US’ trade deficit and will impact the stock market. In an article for Asia Times, PhD candidate at the University of California at Berkeley Zhimin Li explains: “Domestic companies will inevitably suffer from higher input costs and lose their competitiveness. As a result, they will become less able to sell to foreign markets, leading to a deterioration of trade balances for the US.”

He continues: “Moreover, more expensive manufacturing materials will translate to higher prices at the cash register, putting upward pressure on inflation and prompting the US Federal reserve to raise interest rates even more aggressively than anticipated. This will add to investors’ anxiety and foster an unfavourable environment for equities.”

Looking at it all from China’s perspective doesn’t seem as scary or impactful. The tariffs on metals wouldn't hurt Chinese businesses considerably, as China exports just 1.1% of its steel to the US. But steel tariffs are not as significant as the coming fight over intellectual property.

On the other hand though, China has the power to do a lot to infuriate Trump. One of the products that the country depends on buying from the US are jets made by the American manufacturing company Boeing. However, Boeing is not China’s only option - they could potentially turn to any other non-US company such as Airbus for example. The impact of that could be tremendous, as in 2016 Boeing’s Chinese orders supported about 150 000 American jobs, according to the company’s then-Vice Chairman, Ray Conner.

China could also target American imports of sorghum and soybeans, whilst relying more on South America for soy. NPR notes: “Should China take measures against US soybean imports, it would likely hurt American farmers, a base of support for Trump.” An editorial in the state-run Global Times argues: “If China halves the proportion of the U.S. soybean imports, it will not have any major impact on China, but the US bean farmers will complain. They were mostly Trump supporters. Let them confront Trump.”

The list of potential actions that can threaten the American economy goes on, but the thing that we take from it is that the US could well be the one to lose, regardless of where China may apply pressure. So, is businessman Donald Trump, in an attempt to cure America’s international trade relations, on his way to be faced with possible unintended consequences and do more damage than good? Are his seemingly illogical policies threatening to make Americans poorer, on top of firing the first shots of a battle that no one, but him, wants to fight? Will this lead to hostility in the international trading system that will affect us all?

We’ll be waiting with bated breath.

Trading is no longer a male-only club. Women now represent 19% of online traders worldwide, and they’re also more successful at it than their male counterparts. This stems from an international report assessing the habits and demographic data of more than 500,000 traders. It was published by BrokerNotes, the online trading comparison site.

What’s caused the shift
The shift has been driven by the democratisation of trading as a result of the internet. This has paved the way for women to enter an industry that’s historically been dominated by men. But it’s not only that female trader numbers are increasing. They’re also better at it.

Women are depositing less than men in their online trading accounts (on average $424 less) and are making fewer, more calculated trades. Men, on the other hand, make more trades and are much more likely to be reactionary to changes in the market, which is proven to have a negative impact on overall return on investment. This type of trading costs men money – the average income of a female online trader being £35,743 compared to the average male income of £32,525.

The female crypto boom
The crypto boom has had a big role to play in fuelling the surge of female traders. Last year, there were 9.6 million total online traders worldwide. In 2018, it’s now 13.9 million, with 2.7 million of them being female. Interestingly, 59% of women choose to trade crypto over traditional assets like forex.

Although both genders are trading Bitcoin, women only represent 10% of total Bitcoin traders. This points to the fact that women are looking to altcoins when investing in crypto with females accounting for 18% of Dash traders and Ripple also attracting a higher percentage of female traders.

Other data points

• Highest percentage of female traders in the UK are in Herefordshire (21%).
• 42% of women describe themselves as experienced traders.
• 16.23% of female traders earn more than £50k/year compared to only 10.93% of male traders.

Marcus Taylor, CEO at BrokerNotes, commented: “When people think of trading, they think of testosterone-fuelled ‘Wolf of Wall Street’ characters. The reality is there’s no place for stereotypes in an online world. By offering anyone the tools to research and develop trading strategies, the internet has opened up trading to the masses. With more women demonstrating a flair for trading, it points towards a transformation that’s also moving towards gender equality.”