The market could be about to get a lot more volatile this week as fears continue about a trade war.
Volatility started when President Donald Trump accused China of being unfair with American business intellectual property (IP). Apparently American companies need to share their IP with Chinese joint venture partners to gain access to the large Chinese market.
American business has been privately complaining about this for a long time, it isn't a new concept. Previous American presidents like President Obama have tried to address this without much success.
So, President Trump's solution was to create a list of Chinese goods worth around US$50 billion that the US could impose tariffs on. China wasn't going to let this go, so it created its own list of tariffs for American exports. President Trump then threated a further US$100 billion of tariffs onto Chinese products.
No-one benefits from a trade war, investors have already sent share prices down of American-focused businesses like Altium Limited (ASX: ALU) and CSL Limited (ASX: CSL).
According to media reports the Trump Administration and the Chinese have reached an impasse about their negotiations to fix the issues they're having with each other.
What does this mean for markets? More volatility, certainly. Both countries seem unwavering in the belief that the other should give in. The first year of Donald Trump's presidency was surprisingly steady, this trouble is more what some people were expecting.
Foolish takeaway
As I've written many times already, volatility is the price we pay to invest in shares and it will also present a lot of opportunities. Risk and 'bad news' is expected for the share market, the lower the market goes the better long-term value we can get.
