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Trade Wars


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20 minutes ago, Brendan110_0 said:

Trump won't back down with tit for tat, this'll just be the start.

I see the figure of a 20% tariff on European car imports being bandied about in the press. That will hurt 

Trade Wars hit everyone but presumably those countries running current account surpluses have most to lose.

I am not a fan of Trump's trade policy but the EU does not have clean hands on this issue. The whole concept of the EU membership and Customs Union is that members enjoy trade privileges that outsiders do not so it is explicitly uses protectionism to advance is political and economic agenda.

 Neither the US or EU policies on trade are not exactly friendly to third world countries in Africa and elsewhere either.

 

Edited by stormymonday_2011
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4 hours ago, Brendan110_0 said:

Trump won't back down with tit for tat, this'll just be the start.

Trump can say whatever he wants, even sign executive orders. RE:vis-a-vis trade deals & tariffs.

However, the election cycle is short in the USA and he's already nearly half done a term.

And as with the first part, the next president will undo any executive order they wish.

It's all just bluster from a big windbag with no real grasp on geo-politics, or trade.

We all know what happens to US presidents when they piss off the wrong people.

 

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1 hour ago, cashinmattress said:

Trump can say whatever he wants, even sign executive orders. RE:vis-a-vis trade deals & tariffs.

However, the election cycle is short in the USA and he's already nearly half done a term.

And as with the first part, the next president will undo any executive order they wish.

It's all just bluster from a big windbag with no real grasp on geo-politics, or trade.

We all know what happens to US presidents when they piss off the wrong people.

 

...unless he becomes a 2 term President.

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The United States has the world's largest trade deficit. It's been that way since 1975. The deficit in goods and services was $566 billion in 2017.

Imports were $2.895 trillion
Exports were $2.329 trillion.

Lets say you have a trade war and both imports and exports are halved - the trade surplus falls to $250 Billion

But more importantly $ 1.4 Trillion of imports could switch to US suppliers.

Sounds like a no brainer, just as long as none of the USA manufacturers need any imported components.

 

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All reminds me of this interview which seems to predict many of the issues we have today.

You cannot have a future where people here (A) borrow money > to buy foreign made goods > the profit which then is used to buy the home of (A) and the place in which (A) works.    

Could this be the start of the roll back?  

 

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On 23/06/2018 at 08:44, stormymonday_2011 said:

I am not a fan of Trump's trade policy but the EU does not have clean hands on this issue. The whole concept of the EU membership and Customs Union is that members enjoy trade privileges that outsiders do not so it is explicitly uses protectionism to advance is political and economic agenda.

Could equally apply to the United States and one of the advantages of a United Europe

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I kind of understand why he would impose tariffs on raw materials like steel to ensure the guts don't get ripped out of a US domestic industry and all of its stakeholders.

For the EU to impose tariffs on products that in reality directly harm some consumers within the EU itself seems like a different ballgame.

I work in an industry that uses microwave amplifiers. If we use US manufactures our costs have suddenly increased by 50%. And what's to stop the domestic competitors increasing their prices by a corresponding 'only' 30 percent, in quite a tight market. We have to buy them from somewhere, and business is business (as we're frequently reminded). It's going to ream us.

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This all reminds me of a very prophetic post made by particleman back in the days when QE was first being rolled out.. it had to do with the cycle of boom - bust - protectionism - war.

I hope this will not prove as prescient as HPCs previous predictions of an unprecedented  “no one could have predicted it” financial crash.

Linky

The rise in QE programs is what is steering us into a new decade of protectionism (the significance of internal vs external sources of production, and internal vs external sources of capital cannot in my mind be understated).

Where we go next after QE, NIRP, and (my postulation) "walls up" (and overt) protectionism... well I think at this point I've already stated my view, here, in another thread.

Needless to say, wars are rather capital intensive...

 

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Quote

China’s central bank said on Sunday it would cut the amount of cash that some banks must hold as reserves by 50 basis points (bps), releasing $108 billion in liquidity, to accelerate the pace of debt-for-equity swaps and spur lending to smaller firms.

The combined 700 billion yuan liquidity injection exceeded market expectations of 400 billion yuan. In the PBOC’s last targeted RRR cut in April, 400 billion yuan of net liquidity was released. Reuters

It looks like China is going to flood the world with cheap staff.

Can US compete with China?

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