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Will Trump's tariffs lead to a global trade war?

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U.S. markets down overnight on news that Trump is going ahead with his 25% tariffs on $50 billion worth of Chinese goods. The Chinese have said that they will respond in kind. The Trade War is back on.

http://money.cnn.com/2018/06/15/news/economy/china-us-trade-war/index.html?iid=EL

I knew that Trump wouldn't back down from a fight that he had picked. His ego will not permit him to look weak. As we head into the end of the financial year, this could have dire consequences for world markets. I still think that we will finish the financial year at 2018 lows as growth forecasts are slashed.
 

Hard to understand any of this really.

Sanctions on rogue states and bad generals is one thing, trade wars and tariff hikes on friends and enemies alike... Who's going to benefit from it really. Who's going to keep buying, or selling, to your country? And how many people and small operations could afford the hike (unless you stretch that budget further and subsidise them, which will just put the burden on the already stretched plebs).

I mean, assuming the US can be completely self-sufficient, it's going to take longer than Trump's two terms to kick long dead industries back to life to support the raw material and ingredients to produce any thing competitive.

Then once they managed to produced it, the other countries will either still have their tariffs up, or hike it further to keep protecting their industry.

And in the meantime, they will just sell it to the likes of China, at a lost or breakeven just to keep their plebs from all going on welfare.

Read on Reuters that Canadians are now more weary of US-made products, as in they're trying to avoid buying it unless it's absolutely necessary.
 
Does anyone have insight into weather or not China unfairly manipulates its currency? I believe they in part utilise an secret basket of currencies and keep tight reins on the capital flow of their currency. They do this and yet want to play on the world stage. Trumps tarrifs are a responsible implementation of sound monetary policy.
 
It is sure fire way, of getting the inflation ball rolling, and kick starting the economy.
Price hikes, wages rises and profit growth, here we here we go here we go, the capitalist ball slowly gathers speed post gfc stagnation.
 
BlownAccount said:
Does anyone have insight into weather or not China unfairly manipulates its currency?
Click to expand...
It's not really a secret that China for a very long time pegged its currency directly to the US Dollar.

So yes, manipulated most certainly but they're not trying to keep that secret.
 
Hi Smurf, yes although they do indeed have a secret sauce so to speak on the formula used. The other issue is whether or not they act reasonably with regards to their control over currency flow out of the country. I don't know the answer to this although i get the impression they have much tighter controls than the rest of their trading partners. Perhaps they have a good reason for this yet they are commies after all so go Trump and the rest.
Cheers
 

China is being very smart with their capital-flight control. Seems they only allow investment in overseas assets that can demonstrably benefit China and curb capital outflow for no other reason than some comrades and tycoons hedging their bets offshore.

Any intelligent politician should be copying that model. Else the country will suffer like Europe post WWII; Russia, Japan and most of the world after Nixon floated the USD.

Former Greek Finance Minister, Varafoukis [?] wrote on the US's plan under Nixon/Kissinger, one continued by all his successors, of luring capital away from other countries to fill US treasury.

Guess who benefits when property and financial assets boom? Guess who cries all the way home after the show's over?

I don't know enough detail on this, but seems that China's opening up to Westerners under Deng Xiaoping wasn't just the comrades worrying about another revolution from its starving peasants. But also emulating a game the US pulled on the world in luring its capital in to help develop its economy.
 
greggles said:
Trump ups the ante again by threatening another $200 billion in tariffs on Chinese goods if China follows through on its promise to retaliate against the US tariffs announced last week.
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Trump follows through on his promise and prepares another round of tariffs on Chinese goods worth $200 billion.

https://www.cnn.com/2018/07/10/politics/ustr-new-china-tariffs-trump/index.html

China is willing to endure far more economic pain than the US. If this next round of tariffs are introduced then China will no doubt retaliate once again. This tit-for-tat tariff war will inevitably lead to higher inflation and lower growth. Expect a down move on the US market tonight.
 
greggles said:
This tit-for-tat tariff war
Click to expand...

I don't think it's so much a war as a one sided massacre. Trump knows that China sell far more to the US than vice-versa.

The US stands to benefit from not only receiving massive amounts of import duty but also through the protection of local industry. Obviously, those who are against him will emphasise the negative effect on some US companies like Harley Davidson.
 

Good points but you forget that the Chinese leaders are not subject to the same electoral forces as leaders in Western democracies. Term limits for the Chinese President and Vice President were abolished in March 2018. Xi Jinping will be in power for a long time.

Trump was elected primarily by working class blue collar voters. China has already started targeting industries that affect them such as farming and manufacturing by putting tariffs on US exports such as soybeans. There will be more to come. Trump has more to lose in an electoral sense even if the US has more economic weight to throw around. Those blue collar voters will switch political allegiances quickly if their lives get any worse or if they feel Trump isn't acting in their best interests.
 
I agree with your view but see the likely result of China appeasing him will be diverting orders for Australian Wine and Ag to the USA.
 
China can put on what tarrifs it likes, the trade imbalance is still there, and the perception that Chinese gear is crap is still there.
China import $160 billion of U.S gear, the U.S imports $630 billion of Chinese gear, it is simple maths.
China needs to start and play the game, or they will have to dump gear World wide.
Which will be good for us shoppers in Aus.
 
Trump ups the ante again:

https://www.cnn.com/2018/09/17/politics/us-china-tariff-trade-war/index.html

We can expect a Chinese retaliatory response shortly in spite of Trump warning the Chinese against it.
Trump also threatened to inflict more economic pain in the form of additional tariffs if Beijing takes any retaliatory action.
Click to expand...
 
What's your take on all this Greggles do you think this will eventually blow back into the Oz economy?
 
IFocus said:
What's your take on all this Greggles do you think this will eventually blow back into the Oz economy?
Click to expand...
I reckon it's inevitable that it will. I think it will continue to put downward pressure on the AUD. I must admit to being surprised that it hasn't had much of an impact on the gold price yet, but perhaps it's still early days? Still a lot of posturing and back and forth going on. It could get much worse if the Chinese push back hard as I suspect they will. Maybe then we'll see gold heading north a little.
 
greggles said:
It could get much worse if the Chinese push back hard as I suspect they will. Maybe then we'll see gold heading north a little.
Click to expand...

Chinese not pushing back hard after all and world markets shaking off trade war fears. AUD up in the last 24 hours too.
Interesting.
 
Trump's Trade War is back on: https://www.cnn.com/2018/09/23/politics/trump-trade-war-china/index.html

The Aussie dollar and gold are stable right now but it will be interesting to see what happens when the U.S. market opens tonight.
 
Inflation will pick up, interest rates will pick up, wages will pick up, share prices will drop and property prices will drop, and so the cycle goes back to normal.
 
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