BREAKING: China CANCELS Tariffs, Trump Confirms MASSIVE Trade Deal! (Major Changes Explained)

What's up you guys, it's Graham here. So breaking news, it has just been reported that Trump has officially confirmed the trade deal with China. And as it turns out, this is just the very beginning. That's right, in what's now being called a total reset, these trade talks are about to have a major impact on pretty much everything from the stock market, to the price of everyday items, to even the health of our entire economy. So with brand new details just being released, we absolutely have to talk about exactly what just happened and what was said, what this means for you, and how you could use this information to potentially make yourself or save yourself a lot of money, especially now that Trump said that it's a good time to buy stocks. Although before we start, if you appreciate the breaking news videos like this where I literally forego sleep just to get this video out to you as soon as possible, it would mean the world to me if you hit the like button or subscribe if you haven't done that already. It seriously helps out the entire channel and I will do my best to read and reply to as many of your comments as I can. Plus here's a picture of a kitten. So thanks so much and also a big thank you to Surfshark VPN for sponsoring this video, but more on that later. Alright, so in terms of a trade agreement with China, and really the rest of the world, we should start here, the trade deficit. See for those unaware, we export $143 billion worth of our goods to China that they buy from us, but we import $438 billion worth of goods from China that we buy from them, leading to a trade imbalance that the Trump administration wants to put an end to, or at least negotiate so that U.S. products are a lot more competitive. And this is where things get very interesting. Since the 1980s, the United States has begun losing a significant portion of its manufacturing to overseas factories. During the 1990s, policies were put in place to encourage countries to work together around the world. And over time, the United States simply became less competitive and more expensive to manufacture everyday items. Like to put this into context, 70% of our oil imports come from Mexico and Canada. Mexico has also supplied us with 60% of our agriculture. And even though tariff revenue has always been in place, to some degree, over the last hundred years, it's not been enough to make a meaningful difference in terms of government spending. Like take a look at China. Even though there has been a trade deficit since, well, pretty much the very beginning, this imbalance saw a sharp spike higher during the 2020 pandemic when China became the largest exporter for medical equipment. And this is where the situation seems to go wrong. Today, China is responsible for one third of all manufactured products in the world. They have significant infrastructure for battery production, and they occupy nearly every hotspot for mining raw materials. This means that the average Chinese battery pack was more than 30% cheaper than those made in Europe and 20% cheaper than in the United States. This is also said to extend throughout other products, including vitamins, pharmaceutical raw ingredients, household appliances, and personal items, where China accounted for around 75% of the export market. Even with tariffs going into effect in 2018, for China, it made no material difference for their companies whatsoever. So in response to this, we enter the phase of Trump tariffs. This was created as a way to level the playing field between countries, encourage more domestic manufacturing here in the United States, bring back demand for US-made products, and of course increase government revenue. Initially, this started with Trump proposing a 20% tariff on Chinese imports back in March. In response to that, China implemented an additional 15% tariff back on the United States across a variety of food products. This of course resulted in Trump retaliating with a 54% tariff back on China, which resulted in China escalating to an 84% tariff back on the United States, and that is the point where everything completely fell apart. On April 9th, Trump announced a 90-day tariff pause across all countries, with the exception of China because they didn't negotiate. So instead, the United States increased China's tariff to 104%, China refused to back down, tariffs were increased to 145%, and the stock market went into a panic, until it became clear that it was possible to work out an agreement sooner than expected. And that's what's beginning to happen. For example, a few days ago, there was a trade deal announced with the UK, which capped British cars at a 10% tariff on the first 100,000 imports, planes are exempt, taxes on steel and aluminum will be removed, and beef along with agricultural products will be free to trade between countries. Of course, critics of this say that most tariffs still remain in place, so no actual progress is being made, and one CEO went on record as saying that a lot of this deal is smoke and mirrors. What we heard is just noise from most UK imports. It doesn't affect the majority of products. But others argue that it's just a template, it shows that there is room to negotiate, even if it's incomplete. In fact, the UK Prime Minister recently said that this is going to boost trade between and across our countries. It's going to not only protect jobs, but create jobs, opening market access. That's why when a trade agreement was announced with China, the market reacted incredibly positive. Not to mention, so far, there's a direct correlation between Trump tweeting, buy stocks, and the market skyrocketing shortly afterwards from trade agreements. For example, at the bottom of the market, on April 10th, Trump tweeted, it's a great time to buy stocks, and hours later, a 90-day tariff pause went into effect while the markets rallied more than 15%. Then again, a few days ago, Trump tweeted, buy stocks now, again, before any deals were announced. So what just happened with China, and are we about to see another major market rally? Although before we go into that, here's the part I find most shocking. 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Alright, so in terms of the trade agreement with China, here's what Trump just had to say. Well, I can announce all of them now. I could announce 50 to 100 deals right now because, you know, I'm the shopkeeper and I keep the store and, you know, I know what countries are looking for and I know what we're looking for and I can just set those terms and they can go shopping or they don't have to go shopping because everybody wants to shop here. Now, before we go into the exact details of the new agreement, in terms of the impact that China's tariffs have on the United States, here's something to keep in mind. According to the Market Sentiment blog, China makes up about 7% of the total annual revenue in S&P 500 companies. This means that U.S. companies made $1.2 trillion selling to Chinese consumers, which is four times higher than the deficit of goods between China and the USA. This is why if the United States were to completely cut itself off from China, our companies would greatly suffer, not even including the cost of paying more for everyday items that we manufacture over there for a lot less. On top of that, nearly 14% of everything we buy comes from China. They're our second largest trading partner, even above Canada, and they've increased the annual purchasing power of the average U.S. household by $1,500 between 2000 and 2007. This is why it makes sense that a trade agreement would be announced sooner than later in a way that hopefully benefits everybody. And in terms of the deal that was just announced, here's what you came for with the trade agreement. In terms of the details, the United States agreed to lower their tariffs on Chinese goods from 145% down to 30%, and China will reduce their tariffs from 125% down to just 10%. Although as great as this progress is, do keep in mind that tariffs are still higher today than they were prior to Liberation Day, and this is really only a 90-day agreement, meaning there's still a chance things could go up from here, although it is looking very promising. After all, China just went on record to say that it has hoped the U.S. will build on the foundation of this meeting, continue to work in the same direction with China, and completely correct its unilateral tariff practices. In response to that, the U.S. Secretary of Treasury said, I would imagine in the next few weeks we will be meeting again to get rolling on a more fulsome agreement, and that we can always return to April 2nd levels at 34%. Essentially, this 90-day pause gives them time to construct a more broad and comprehensive plan, but it also suggests that right now the worst is behind us. Although forewarning, after this deal was announced, Trump said that the European Union is nastier than China, noting that about 750,000 cars were exported from the EU to the U.S. We also trade about a trillion dollars a year with the European Union, making them one of our biggest trading partners, so there could be a round two of this. Who knows, the situation seems to be changing by the minute. Although before I go into my own thoughts, as well as the impact of the stock market, I've said this before, but even though it seems like we're getting ripped off by China because we buy more from them than they buy from us, once you take a deeper look, it's not exactly as surprising. Like, just consider this, here in the United States, we have almost $164 trillion worth of wealth, with a savings rate of just 4.6%, compared to China's $84 trillion of wealth and a 44% savings rate. See, culturally, China's based on the philosophy that money should be saved and not spent, and that wealth disparity leads to a trade imbalance between the countries. In this case, it isn't so much of a trade deficit, but rather fundamental differences when it comes to consumption, savings, and priorities. And frankly, if you enjoy paying low prices for everyday items, that is in part due to China's ability to produce items very quickly and cheaply. We've also seen a huge trade imbalance from China beginning in 2020, where we bought significantly more from them than they bought from us. And as shocking as this looks from the surface, it's a lot less remarkable when you consider that most of China was on lockdown and unable to buy anything during the pandemic, during the same time that we imported a lot of medical equipment from China. So again, it's a little less dramatic than the chart makes it seem to be. All of this just really points to the fact that, yes, we are reliant on China, just as they are on us, and the sooner an agreement is reached, the better it is for everybody. Although in terms of when I think about everything going on and my plan for the future, here you go. Realistically, all of this means that tariffs are still in place, they are significantly lower than they have been over the last few weeks, and this is a great sign that sides are open to communication and working something out. But it's also still not over, we have a long ways to go, and if U.S. companies are expected to manufacture more of their products here locally, that's not something that can happen overnight. Yes, the stock market's reacting quite positively to all the news, and perhaps Trump knows something the rest of us don't when he says to go out and buy stocks. But for my own strategy, I'm not letting it make a material impact, and I keep buying as usual, and when things drop, I just keep buying a bit more. Honestly, it's a bit worrisome that the markets are moving up so much on a buy the news mentality that anything gets instantly priced in the moment it's announced, even as Trump reiterates that China tariffs will go up without a deal. That's why, at least over these next 90 days, I would just say to be cautiously optimistic. Of course, the entire situation also changes by the minute, so if you want to be kept up to date with all the breaking news, make sure to subscribe, hit the like button, and I promise to keep you updated every step of the way. Thank you so much for watching, and until next time.