In markets very reminiscent of the January declines, President Trumps latest broadside on China’s trade balances with the USA, has again unsettled global markets, where we are now into 5 straight days of market declines. As the threat of sanctions and tariffs between the world’s largest two economies deepen, overnight the Shanghai Index closed down 4%, and all European markets are weaker this morning. So if the world’s top economies are hell bent on a global trade war, what happens now? There is certainly a risk that this could escalate, but as we have pointed out before, Trump is long on Rhetoric, but short on action, and as Shakespeare once said ‘full of sound and fury, signifying nothing’. This is what happened in January, when Trump began his volleys toward China, but markets recovered. Right now it is tit – for – tat, with little actual outcome or impact. A full blown trade war however will involve much greater and wider tariffs, which would hurt corporate earnings, which in turn could be inflationary, which will cause Central Banks to raise interest rates, which will end this current long economic growth phase. However, market expectations will get to the stage where they have factored in the bad news, and there will be opportunities for investors, it just depends upon where we get to regarding the above. Protectionism doesn’t work. Look at the EU, the biggest protectionism racket on the planet, and that is bust. The Soviet Union, again a protectionist regime, did not work. So we wait to see if President Trump wants to be added to that long list of failures.