Strategic Management and Leadership

Running head: STRATEGIC MANAGEMENT AND LEADERSHIP
Strategic Management and Leadership
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1STRATEGIC MANAGEMENT AND LEADERSHIP
 A brief summary of the event
The news published in CNN Business by Matt Egnan on August 6, 2019, is
titled, “How Trump’s trade war could crush oil prices” (Egan 2019). The
trade between the two largest economy of the world is increasing in intensity.
Due to the less than satisfactory trade practices in china has led US to
increase tariff for Chinese goods exponentially. Evidently, the oil market all
over the world is about to take hit due to their tariff competition. Merrill
Lynch of Bank of America predicts that China would soon retaliate against
the US increase in tariff by buying the oil in large scale from Iran thus
overlooking the OPEC nation sanctions of Washington. This would affect the
price of crude and refined oil severely. It is expected that a barrel of oil will
drop down to $40 from $60. Due to the increasing tariff, China already have
announced their halt in the purchase of US agricultural goods. During the
trade war, the oil export from Iran has already reduced and the experts believe
that it will dwindle further. Despite all that, Matt Smith, the director of
commodity research at ClipperData believes that China will not initiate any
action that will create open provocation to the US as they are aware that US
might sanction any major Chinese company their supply of Iranian oil that
would destroy their effort to one-up US in this trade war.
 How will the event affect other companies or markets?
This event has far-reaching effect on other companies, big or small. First of
all, the increasing tariff rate is already impacting the industries (Francois et al
2015). People doing business that have manufacturing units in China and
market in US are facing steep competition as their product price is increasing
slowly. Now, as the experts imply severe decrease in oil prices, and US’s