Says WSJ: https://www.wsj.com/articles/the-trade-war-hits-china-where-it-hurts-11565552398 What do you think?
I think the idea of winners and losers in a trade war is ridiculous. We get real goods back from China in exchange for little pieces of paper with president's faces on them, backed by absolutely nothing. Fiat, fugazi, little electronic numbers on a computer ledger somewhere. If aliens were watching from space, they would think the US was enjoying the greatest trade arrangement in the history of the planet. But I digress. In 2017, the US should have filed a joint grievance with the G7+ to the WTO regarding trade with China. Under such a situation, China would have had no choice but to make changes, or risk losing trade relationships with the entire G7. Instead, our supreme leader in his divine wisdom decided to isolate the US completely by badgering Canada, Germany, Mexico, and to a lesser extent Japan on trade issues, thus killing America's opportunity to take a leadership role here. Secondly, the blanket tax cut for corporations should never have occurred. Trump should have offered massive tax cuts/incentives only for those corporations who made sizable CAPEX investments inside the US. Oh well, too bad. That opportunity has now come and gone.
I wouldn't be surprised to see the Fed adopt a more aggressive tone in terms of rate cuts in the coming months. The EU and China are openly depressing their native currency valuations versus the Dollar. I agree with you about the joint grievance to a certain extent - China would have certainly slow rolled the WTO as they have since 2002. It will be very interesting to see how the WTO proceeds with the substantial EU intellectual property complaint they filed against China in 2018. I'm in favor of US Corporate tax rates being lower than the worldwide average of 23% provided that it is simplified and without deductions other than native capital investment. The US needs to get rid of the complex tax breaks. Ireland has certainly fashioned itself into a corporate tax haven.
That little thing called "faith in repayment" has in the case of the US not yet failed once. Perhaps that is why the Chinese prefer to accept dollars rather than Argentine pesos. But I digress... ... And of course that complaint at the WTO should of course only have been lodged in 2017, not during the 8 years under Obama? Perhaps you are forgetting that congress needs to vote on things like a WTO complaint? You are blatantly aware that liberals under Trump block even total sensical immigration reform. That is why this president is forced to enact many issues behind the back of congress. A majority of the left would never label any trading partner anything, prefers to let any refugee and asylum seeker in, no question asked, extend social welfare to everyone even if they never paid into the system. See, there is this small issue of executive power and decisions that the administration can decide on its own that are way more powerful than getting washed down in the congress toilet. I would say the admin has a pretty good grip on the Chinese invasion. Organizations are now on high alert to be careful when it comes to Chinese researchers and employees in the US, the country is careful which top technology to share with China and which not. The admin is raking in 65 billion in tariffs now which can be easily distributed to struggling farmers. Chinese products are not that expensive for end consumers in the US so far. Looks to me it works quite well given the damage the tariffs inflict on China. Fully agree with you on the corporate tax cuts. There should have been strings attached. In the words of the supreme leader "it would have been beautiful"
Please don't throw Europe into one pot with China. By many accounts Rmb is currently not even undervalued. The Euro is by perhaps 10% but it is not because of any charade the ECB is playing. There is a reason currencies are allowed to fluctuate, it's called different fiscal and economic policies. Europe is pulling back more strongly than the US, particularly Germany. Hence the ECB communicating a dovish tone. Has nothing to do with wanting to wage a currency war. Hold your breath re WTO. The effects those tariffs already have will put into the shadow anything that will eventually come out of the WTO. China has gamed the system for too long. Time to put pressure even on ordinary Chinese so they raise their grievances with their own government. Time to shame and blame Chinese tourists (those who misbehave), limit access to education for overseas Chinese, be extra vigilant towards Chinese researchers or employees in corporates, particularly on any government contracts. Let them feel the pressure and they will surely take it home. China fears nothing more than domestic unrest and an unhappy citizenry.
Going off gold standard in 70s and substantially devaluing in 30s In my opinion both cases are defaults
It was a nice post until the last paragraph. Your solution is a distortion of free markets. It also may be a violation of international trade rules.
30s was a recession. No sovereign defaults. 70s, no default either, nor any devaluation. There are economic facts and reason why inflation sometimes spikes. Not everything is engineered by an evil empire.
Oh fer crying outloud. China is going to blink....blink...blink. Did I say blink? Americans want instant grits..instant oatmeal..instant lunch..instant supper.. instant pay...everything on a time table or they get pissed. Look boys great deals take time to make. Screws have to be tightened down. There has to be some squealing. Mr T will pull it off China has the most to lose. Can’t wait for some more tariffs to be executed. Kinda of like averaging down in trading. Love it.
Screw the international trade rules which has been screwing the USA. Atta a boy Mr T tighten the screws down!