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Title: Why America’s Trade War With China Will Be Absolutely Crippling For The U.S. Economy
Source:
The Economic Collapse
URL Source: http://theeconomiccollapseblog.com/ ... -crippling-for-the-u-s-economy
Published: Jun 18, 2018
Author: Michael Snyder
Post Date: 2018-06-19 09:58:11 by Deckard
Keywords: None
Views: 3985
Comments: 34
Can the global financial system handle a full-blown trade war between the two largest economies on the entire planet? We have never seen anything like this happen in the modern age, and this is creating a tremendous amount of uncertainty for the financial markets. Yes, something had to be done, and I have been writing about this for years. China has been stealing our intellectual property, manipulating currency rates and slapping high tariffs on American goods. We simply could not allow China to continue to take advantage of us, but now we are so dependent on the Chinese that a trade war with them is going to inevitably produce a great deal of pain. We are all going to wish that another way could have been found to resolve this crisis, because in the short-term this is definitely going to hurt the U.S. economy. And if President Trump chooses to press forward with trade wars against Europe, Canada and Mexico at the same time as well, the pain for our economy is going to be off the charts. Most Americans didn’t even notice, but Donald Trump fired a shot that was very clearly heard all the way over in China on Friday when he slapped a tariff of 25 percent on 50 billion dollars worth of Chinese products… China accused the United States of firing the first shot on Friday when the White House said that it would impose tariffs of 25% on $50 billion worth of Chinese goods. The announcement confirms a threat first made by President Donald Trump in March and follows months of trade talks between the two sides. A truce was announced in May, but it proved short-lived. “The United States has kept changing its mind and now launched a trade war,” China’s Commerce Ministry said in a statement. The Chinese retaliated almost immediately by slapping a 25 percent tariff on 50 billion dollars worth of our goods… China will slap hefty tariffs on U.S. goods in retaliation for President Trump’s decision to levy duties on $50 billion worth of Chinese imports. Beijing will impose an additional 25 percent tariff on a total of 659 U.S. imports worth about $50 billion, according to a statement on the country’s Ministry of Finance website. The first batch of tariffs will hit 545 U.S. products worth about $34 billion, including agricultural products, such as soybeans, corn and wheat, automobiles, beef, pork and seafood, and will start July 6. President Trump took the weekend to think about it, and on Monday he decided to raised the stakes much higher. If the Chinese really do go ahead with their tariffs, the Trump administration is going to hit them with a 10 percent tariff on another 200 billion dollars worth of their goods. The following is from Trump’s official statement… This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in our massive $376 billion trade imbalance in goods. This is unacceptable. Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States. Therefore, today, I directed the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent. After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced. If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods. The trade relationship between the United States and China must be much more equitable. If China does not match each round of tariffs they will look weak, and if Trump does not keep raising the ante every time China matches him then he will look weak. So where will this end? Ultimately the goal is more balanced trade with China, which would mean more jobs and more factories here in the United States. But in the short-term we won’t see any of that. Instead, all we are going to see is tremendous pain. First of all, you should expect to see higher prices on any products that are made in China. This is going to hit consumers that shop at Wal-Mart and the dollar stores particularly hard. Secondly, any companies that sell products in China are going to be hurting. It is inevitable that some will start laying off workers, and that means that there will be job losses here in the United States. And even the expectation of lower profits will send stock prices tumbling. In fact, we already started to see this happen on Monday… Major American companies that generate a significant chunk of their sales from China, such as Boeing (BA), Caterpillar (CAT), Intel (INTC) and 3M (MMM), were among the losers on the Dow on Monday. The Dow has fallen nearly 1.5% in the past week and is close to erasing its gains for the year. If a global trade war breaks out and slows economies around the world, it could bring an end to the bull market that has raged for more than nine years. In the short-term, nothing good is going to come out of this trade war. And even in the mid-term, the pain is going to far, far outweigh any benefits. This is why a trade war should always be a last resort. As much as possible should be accomplished through negotiations, and it is unclear if negotiations were utilized as extensively as they could have in this case. If China wants to play hardball, they could start dumping U.S. Treasuries or cut off our access to rare earth elements. If they pulled either trigger, our level of pain would instantly be multiplied. We can definitely hurt China too, but we do not have any magic bullets that will force them to yield. Once a trade war begins, it can potentially last for many years, and let us not forget that history has shown us that trade wars can often lead to shooting wars. I believe that a tragic strategic mistake has been made, and this is not going to end well. Michael Snyder is a nationally syndicated writer, media personality and political activist. He is the author of four books including The Beginning Of The End and Living A Life That Really Matters.
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Begin Trace Mode for Comment # 13.
#2. To: Deckard (#0)
OMG do you really like carrying the water for the commies? No such thing as free trade and the closest thing is fair trade which is what Trump is aiming for. Truth is almost every article you post is about bashing America to destroy it instead of fighting the real fight which is socialism. In fighting socialism you must not just pull the rug out from everyone which would cause a economic collapse and will bring in bigger government with more power. You basically defeat your own desire of a better freer America for destruction. Why?
Actually - the author is a Republican
Doesn't mean they will not work in conjunction with commies. Look about McCrazy.
I didn't see McStain endorsing Snyder. What is it with you Trump cultists - seems as if whenever anyone writes a piece that questions the policies of Dear Leader, even if it's a die hard conservative who has the criticisms, you immediately call him a commie?
#14. To: Deckard (#13)
I have been bitching about one sided free trade for decades! You good with one sided free trade???????
Michael Snyder didn't so much as "question" the policy of fair tariffs and policy that would help America reestablish our own manufacturing and industry; He got paranoid and stabbed away at the policies -- WITHOUT UNDERSTANDING THE BASIC PRINCIPLES. Since you mentioned "Commies", ONLY Commies and politicians with ties to international lobbyists (with financial ties to ChiCom industry) would oppose fair tariffs and reduction of the $400b per year deficit. Smells a lot like Snyder is engaging in a quid pro quo in exchange for his criticism. "Die Hard Conservative"? No sale.
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#11. To: Justified (#2)
OMG do you really like carrying the water for the commies?
#12. To: Deckard (#11)
#13. To: Justified (#12)
Doesn't mean they will not work in conjunction with commies. Look about McCrazy.
Replies to Comment # 13.
#25. To: Deckard, Justified (#13)
What is it with you Trump cultists - seems as if whenever anyone writes a piece that questions the policies of Dear Leader, even if it's a die hard conservative who has the criticisms, you immediately call him a commie?
End Trace Mode for Comment # 13.
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