{"id":8097,"date":"2019-07-09T18:39:08","date_gmt":"2019-07-09T18:39:08","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=8097"},"modified":"2022-02-26T13:07:15","modified_gmt":"2022-02-26T13:07:15","slug":"fireworks-tariffs-and-the-trade-war-with-china","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/fireworks-tariffs-and-the-trade-war-with-china\/","title":{"rendered":"Fireworks, tariffs and the trade war with China"},"content":{"rendered":"\n<p>When most Americans think about the 4<sup>th<\/sup> of July,\nwe think of family time, barbeques, hot dogs, red white and blue, fun in the\nsun, and maybe a few cold beers too. But perhaps the most iconic modern-day\nAmerican tradition surrounding the 4<sup>th<\/sup> of July is, of course,\nfireworks. <\/p>\n\n\n\n<p>Though it may be difficult to believe, fireworks are\nactually getting caught up in the ongoing U.S. \u2013 China trade dispute,\nunderscoring just how far-reaching the tariffs from both nations have become.\nThe U.S. is currently poised to impose new 25% tariffs on $300 billion worth of\nChinese imports, and this latest batch includes goods like fishing reels,\nelectric blankets, and \u2013 pertinent to the 4<sup>th<\/sup> of July \u2013 fireworks.<sup>1<\/sup>&nbsp; &nbsp;<\/p>\n\n\n\n<p>The 273 categories of goods on the new tariff list include myriad\nconsumer goods, 90% of which are imported from China. As the tariffs loom, U.S.\nbusinesses are increasingly voicing concern that they are hard-pressed to find\nsubstitutes for imports and supply chain components. In the spirit of the 4<sup>th<\/sup>\nof July, the <em>Wall St. Journal <\/em>recently\nfeatured a fireworks company experiencing these exact trade-related hardships. The\ncompany, Atlas PyroVision Entertainment based in New Hampshire, can\u2019t seem to\nfind domestic substitutes for fireworks imported from China.<sup> 1<\/sup><\/p>\n\n\n\n<p><sup>______________________________________________________________________________________________<\/sup><\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_7_8&amp;content=stock_market_outlook_report\">Are You Prepared for What\u2019s Next for the Market?<\/a><\/strong><\/p>\n\n\n\n<p>When preparing your investments for what\u2019s next &#8211; be it a\npotential recession, more trade conflicts or more &#8211; it is important to keep an\neye on key economic indicators. To help you do this, we are offering all\nreaders a look into our just-released <strong>July\n2019 Stock Market Outlook report.<\/strong><\/p>\n\n\n\n<p>This\n22-page report contains some of our key forecasts to consider such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Inside the China tariff war<\/em><\/li><li><em>Why are Zacks strategists (including me) staying\nbullish?<\/em><\/li><li><em>Stock market returns expectations for 2019 <\/em><\/li><li><em>Small-cap and large-cap outlook in 2019<\/em><\/li><li><em>What of cuts in global growth?<\/em><\/li><li><em>What produces 2019 Optimism?&nbsp; <\/em><\/li><li><em>And much more.<\/em><\/li><\/ul>\n\n\n\n<p>If you\nhave $500,000 or more to invest and want to learn more about these forecasts,\nclick on the link below to get your free report today!<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_7_8&amp;content=stock_market_outlook_report\">IT&#8217;S FREE. Download the Just-Released July 2019 Stock Market Outlook<\/a><sup><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_7_8&amp;content=stock_market_outlook_report\">2<\/a> <\/sup><\/strong>\u00a0<\/p>\n\n\n\n<p>________________________________________________________________________<\/p>\n\n\n\n<p>Atlas PyroVision used to make fireworks domestically, but\nrising costs and the rise of globalization made domestic production\nuneconomical relative to the option of moving supply chains abroad. This shift\nin business wasn\u2019t necessarily a recent phenomenon for Atlas \u2013 they stopped\nmaking their own fireworks in the U.S. in 1995.<\/p>\n\n\n\n<p>Since then, they\u2019ve largely been importing from China, much\nlike a majority of U.S.-based fireworks retailers. The U.S. Census Bureau\nestimates that 86% of fireworks used for shows in the U.S. are imported from\nChina, a figure that\u2019s progressively been on the rise. The CEO of Atlas\nPyroVision, Stephen Pelkey, stated that he does not even have the option of\ngetting his fireworks containers from U.S. companies, because there are no\nmanufacturers operating in the space. Competitive pricing drove them out years\nago.<\/p>\n\n\n\n<p>In response to the tariffs, some U.S.-based fireworks\nretailers have looked elsewhere to Vietnam, Cambodia, India, and Mexico, but the\nconsensus is that businesses cannot find the same quality and price as China\u2019s\nversion of the fireworks. The notion of upstarting U.S. manufacturers to\nproduce fireworks substitutes is far-fetched, as the infrastructure and\ntraining needed to get up and running would be far too high.<sup>3<\/sup><\/p>\n\n\n\n<p>This fireworks story, in a sense, represents a high-level\nreality for corporations caught in the web of tariffs and the trade war. It\u2019s\nnot to say that tariffs are inherently good or bad, and I\u2019m not weighing in on\nwhether or not they will ultimately be effective. Time will tell. But the\nreality on the ground for many U.S. companies who use Chinese manufacturers as\ncomponent suppliers, or who import from China directly, is that the trade war stands\nto directly affect supply chains and costs. And higher costs for sellers means\nhigher costs for consumers. &nbsp;<\/p>\n\n\n\n<p><strong>Where Does the Trade\nIssue Go from Here?<\/strong><\/p>\n\n\n\n<p>As it stands today, the 25% tariffs on $300 billion of\nChinese imports is not in effect, and market watchers are very closely eyeing\nthe meeting between President Trump and President Xi Jinping at the G20 summit\nin Japan. Though the Commerce Department has indicated that this meeting is not\nexpected to generate an actual breakthrough, many are hoping and expecting that\nin the very least it will bring both sides back to the negotiations table. <\/p>\n\n\n\n<p>The two leaders have gotten along in the past, so the\npossibility of progress feels possible. However, reports this week indicate\nthat President Xi Jinping plans to present President Trump with a list of terms\nthat the U.S. should meet before China becomes willing to arrive at a deal.\nAmong those \u2018terms\u2019 include the dropping of current punitive tariffs and an agreement\nto end the U.S. ban on selling U.S. technology to China\u2019s telecommunications\nbehemoth, Huawei Technologies. In my view, this is a tall order I\u2019m not sure\nthe U.S. will like.<sup>4<\/sup> <\/p>\n\n\n\n<p><strong>Bottom Line for\nInvestors<\/strong><\/p>\n\n\n\n<p>As you celebrate the 4<sup>th<\/sup> of July this year, it\u2019s\nimportant to remember that the United States still has the largest and most\ndiverse economy in the world. Not only do we produce more goods and services\nevery year than any other nation, our economy is also resilient to shocks and\nhas weathered trade wars \u2013 and real wars \u2013 throughout history. As the U.S. and\nChina dig in for what could be an extended trade dispute, I\u2019d still argue that\nthe base case for the U.S. is to see growth over 2% in 2019. And that\u2019s worth\ncelebrating. <\/p>\n\n\n\n<p>In the meantime, I recommend staying focused on the long term and on key economic indicators. To help you do this, I invite you to <strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_7_8&amp;content=stock_market_outlook_report\">download our Just Released July 2019 Stock Market Outlook Report.<\/a><\/strong><br> <br> This Special Report is packed with our newly revised predictions for 2019. For example, you&#8217;ll discover Zacks\u2019 view on:\u00a0<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Inside the China tariff war<\/em><\/li><li><em>Why are Zacks strategists (including me) staying\nbullish?<\/em><\/li><li><em>Stock market returns expectations for 2019 <\/em><\/li><li><em>Small-cap and large-cap outlook in 2019<\/em><\/li><li><em>What of cuts in global growth?<\/em><\/li><li><em>What produces 2019 Optimism?&nbsp; <\/em><\/li><li><em>And much more.<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, learn how you may be able to prepare your portfolio for changes in the economy by reading this new report today.<sup>5<\/sup><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tariffs could impact $300 billion in consumer goods\u2014including fireworks<\/p>\n","protected":false},"author":3,"featured_media":7430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71],"tags":[],"class_list":["post-8097","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitch-on-the-markets","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8097","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8097"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8097\/revisions"}],"predecessor-version":[{"id":10741,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8097\/revisions\/10741"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8097"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8097"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8097"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}