True tax cut is aimed to create demand. A good point. I seriously think Trump will bring better economy. US has the world's largest debt primarily because of huge trade deficit. Trade deficit is caused by companies doing outsourcing. e.g. Apple, Nike etc Imposing tariff on these companies will make them cut off their foreign labours but this is not a concern to US govt. It will be interesting to see whether tariff will lead to higher inflation which could offset tax cut
Tarriffs by definition restrict trade typically to cut lower priced goods from the market.. now do some simple addition . What happens to prices when the lower priced goods are banned.....
1) Tariff limits imports - what it implies is US made products are relatively expensive because of higher labour cost. Given that a lot of US companies are doing outsourcing, tariff will have negative impact on these companies - less supply could make companies to raise selling price 2) Tariff limits trade wars - it's primary motivation is to reduce competition between domestic firms and foreign companies relevant article: http://dailytimes.com.pk/business/2...riff-on-chinese-goods-is-perfectly-calculated
Now after trumpo blocks trade what do you think the lower priced good countries will do about it??? Subsidize more to compensate. Which in turn shows up in a currency war. This isn't rocket science
No we don't.. bottom line it hurts both countries... It's just the political class being political entrepreneurs while we are subject to whatever happens
Without imposing tariff, yes, there would be a currency war, given the interest rate rise. However, with tariff, I don't expect a currency war. It's more like Win-Win situation for America. Trump is a business man, he knows the inside and outside of the business world.