Trump’s aggressive tariffs policies hurt the property market

U.S. President Trump has fully launched an increase on tariffs which he imposed on most goods from China, Canada and Mexico, and the global tariffs and trade war has begun in full swing. The U.S.'s first move to impose additional tariffs has urged China and Canada to counter-impose additional tariffs on all U.S. imported goods for revenge. Finally, U.S. exported goods will decrease, and an unexpected surge in prices of imported goods in U.S. is inevitable. 

The U.S. government is just wishful thinking and too naive to believe that its country will take all the benefits from the additional tax revenues from Canada, Mexico, and China. It wishes all the costs will be borne by the exporters and importers have no need to raise the retail prices in the internal market. The U.S. government is such a moron to embrace a crazy dream like this. It imposed tariffs 20% on goods from China and 25% on Canada and Mexico. How could exporters to U.S. absorb all these huge sums of money? 

Such extreme tariffs policies by the United States will force importers to take on large part of additional tariffs by raising the retail prices of goods in great amount. Consequently, the overall rise of goods will cause hyperinflation in the consumer market. America first policy will finally drive its country to suffer the rising prices of all imported goods.

In order to suppress inflation, the U.S. Federal Reserve will have a greater chance to raise interest rate in the third quarter of this year. If it happens, Hong Kong will be forced to follow suit. As a result, the property market will hardly be unaffected. 

Under the tariffs war, the business environment in China and Hong Kong will certainly be deteriorating in second half of this year. If the situation prolongs in a lengthy period of time, the sales volumes of first and second-hand properties will also plummet in great amount. Therefore, the recent boom in sales of first-hand properties will not be sustainable. Developers are well aware that the economic outlook is unpredictable, so they have recently been competing with each other to launch new projects in the shortest time and sell properties to cash out as quickly as possible. 

Lately, large agency firms quietly cut down some branches, and their industrial and commercial department did it furthermore by laying off one third of staff in its back-office departments. In order to create a better business atmosphere, top company executives are to keep on touting that the property market has bottomed out, but behind the scenes, their bosses are busy laying off employees and are preparing for the hard days ahead.