China’s Real Estate Bubble And 5 Other Predictions that Turned Out to be Wrong

4. James Tudor: Market Crash Due to Trade Wars

Prediction: 2019

Donald Trump will go down in history as one of the US presidents who ramped up tensions between Washington and Beijing. At the peak of his tenure at the White House, Trump ramped up pressure on China, imposing significant tariffs as he sought to address a significant trade deficit between the two nations.

Trump ended up imposing billions of dollars on Chinese imports. China also hit back, imposing tariffs on US imports. The escalating trade war between the two economic powerhouses rattled the global financial sector, with US markets under immense pressure. There were concerns about the trade war, given that US exports to China support over 1.2 million American jobs. In addition, Chinese multinational companies employ over 190,000 Americans. Likewise, US companies invest over $100 billion in China.

In response to the trade war, Tudor warned of a potential market crash due to escalating tensions between the two nations. The hedge fund manager further claimed that the trade war could cause a global recession, a currency war, and the eventual collapse of corporate earnings.

The trade war had significant impacts, with the United States believed to have lost over 240,000 jobs as China imposed tariffs on imports. While President Joe Biden did not recede the tariffs imposed by his predecessors, their impacts appear to have been curtailed.

Despite the warnings by the billionaire investor, a full-blown market crash did not materialize. The US and China reached a partial deal in 2020 that eased some of the tariffs and tensions. The US economy has grown at an impressive rate, supported by other consumer spending and solid labor market conditions.