“If we have an all-out trade war, tit for tat, and other countries get in and the average consumer pays more money for their goods and services, that could bleed the economy and could cause a significant drop in the market if not handled surgically carefully.” Derrick Kinney, Private Wealth Advisor
The Chinese government announced its plans Tuesday to impose new retaliatory tariffs on $60 billion in U.S. exports. The result: Trump threatening to hit Chinese goods with more than four times the amount and a series of bleak projections for what the escalating tensions between the two economic superpowers could mean for the financial wellbeing of America.
Shortly after the news broke, hedge-fund titan David Tepper made headlines after warning CNBC Thursday stocks could drop between 5 and 20 percent if the threats come to fruition.
Host Chip Franklin asked Derrick Kinney, a private wealth advisor, for his perspective on Tepper’s prediction. (Note: Franklin, for the most part, didn’t agree with Kinney’s viewpoint.)
According to Kinney, whether there will be a significant drop in the market depends on how other parties react.
“If we have an all-out trade war, tit for tat, and other countries get in and the average consumer pays more money for their goods and services, that could bleed the economy and could cause a significant drop in the market if not handled surgically carefully,” he explained.
Kinney said, for now, Wall Street earnings are good and consumer confidence and spending is high, but he worries increased tariffs combined with the ongoing Russian investigation and upcoming midterm elections could create the perfect storm and spell economic disaster.
“Right now, this economy, if it’s a train, is chugging along nicely on the tracks,” he told Franklin. “The problem is, will it hit something and knock itself off the track?”
He noted how companies choose to address the tariffs — absorbing the costs vs. passing costs on to consumers — and Trump’s nontraditional conduct are both additional influential factors that could affect the market in the coming months.
Franklin took particular issue with Kinney’s claim American consumers are currently thriving — he argued it’s primarily big business taking home the wins and Trump’s economy is “a house of cards” on the verge of collapsing.
Listen to Franklin and Kinney’s full conversation below!