Land of the Rising Trade Tension
Forget the US and China; it’s Japan and South Korea we should be worried about! The two Asian economies have come to blows after years of political tension, now giving investors plenty to think about as a financial tsunami builds against electronics stocks around the world.
South Korea has lost its place in Japan’s good books, no longer being called a ‘preferred trading partner.’ The South Koreans are accused of using Japanese imports for military applications, and booting them from his ‘whitelist’ has been a move Japanese Prime Minister Shinzo Abe has been threatening for a while. We’re talking years, and it didn’t help when South Korea poured fuel on the fire by bringing up the ghosts of their past. Some think the South Korean government has been egging on its citizens to sue the Japanese for forced labor back in, wait for it… 1945. What has the world come to?
It’s all deadly serious to investors, however. Trade between the two nations is about to get a lot more congested as imports and exports are subject to more checks than usual, and who knows where this could lead? The dispute is yet to show signs of simmering down, and markets across the globe are concerned about full-on tariffs coming into play. With the South Koreans already promising revenge, don’t be surprised if growth forecasts for the global economy lose a few points!
As the global epicenter of electronics manufacturing, Korea has a lot to lose. Consumer products companies from the US have their supply chains taking a direct route through the Korean peninsula, boosting economic prosperity in the southern region.
It just got real in Tokyo and Seoul. Both economies are trading barbs, but soon, they may not be trading much at all. Origatto for now, investors!