Many people are talking about the implications of the 2019 Novel Coronavirus (Covid-19) on the world economy. HSBC shares recently fell by 5.59% on the 18th of February as they decided to lay off 35,000 employees and expect losses of $600 Million if the virus persists. Apple is feeling the strain as well. Their stock fell 1.83% on the same day, citing loss of sales in the Chinese market as well as strains on the production of iPhone and other key products.
The implications on the world economy have been well studied and reported on, but the effect on national economies has not, and I believe that's what we should be focusing on. Covid-19 will hurt Asian markets much more than it will hurt American markets. This explains HSBC and Apple's pressures: they both have much focus on Asia for supplying their products or for customers.
In the long run, Covid-19 could help President Trump's goal of American dominance as companies realize that China is too volatile of a trading partner.
China will soon have to admit it: they are poor. They are more unstable than they'd like you to think. They weren't prepared for Covid-19, and suspected cover-ups could, in the long run, hurt China's reputation, which wasn't entirely rock-solid before.
Companies are becoming scared to enter the Chinese markets because they realize when they're in China, they under the whim of the Communist Party of China and China's authorities.
If they do something to displease the regime, they're out. Recently, the central government decided to ban Winnie the Pooh and friends in China because people pointed out the similarities between Jinping and good old Winnie (and same for Carrie Lam and Piglet).
With China closing much of its trade-off, putting in curfews, and keeping its population on lockdown, the Communist Party is realizing the potential impact of the virus and its potential to not just lower China's growth, but in fact to destabilize China.
This resulted in the central bank of China, the People's Bank of China injecting $126 Billion into their "slowing" economy, as reported by the New York Times.
China has seen rapid growth in the past few years, but Covid-19 has the ability to slow this down and allow the United States to catch back up and this is what the Communist Party is truly worried about.
Instead of President Trump having to continue tariffs to promote his ideal of "America First", the Covid-19 might just do that for him.