You are viewing a single comment's thread from:
RE: TIB: Today I Bought (and Sold) - An Investors Journal #251 - US Interest Rates, Dutch Insurance
Will taarif flow to change as the flow of goods slows down or changes direction? Is this a gap?
Will taarif flow to change as the flow of goods slows down or changes direction? Is this a gap?
First thing businesses will try to do is find alternate markets. For buyers this could mean buying locally or buying from a country supplier who is exempted. Example, China has already started buying soy beans from Brazil and not US. For sellers they look to find new customers in new countries.
Second thing is businesses look to see if they can pass on the higher prices to their customers. If they can, they continue buying and the customer pays. The customer then has to work out what they do with less money - stop buying that product or some other product or borrow more money.
If customers cannot take the higher prices, the business has to decide if they can absorb the higher cost. If they can, the trade continues but profits go down and the knock on goes to shareholders as reduced dividends or to other cost categories which get reduced.
Ultimately the end result is a reduction of demand somewhere in the supply chains and economic growth suffers. Already we are seeing estimates for 0.5% reduction in China GDP growth, as an example.
Thanks for your explanation, this is very professional. Allow me to share this with everyone.