Trade War with China

[tidalwave]

At the point it's no longer free play, this trade war has become Trump's biggest political asset. Almost all his other policies failed or attracted huge backfire. If he backs down on trade it basically meant the end of his political life and it will deal a huge blow to the GOP as well.

If full blown $500 billion tariff levied which wipe out all China exports to US, it will cause big inflation.
And if China adopts a zero sum attitude, meaning as long as thing can get the other side hurted, and even self damage would be justified. Kind of what US thinking currently. Then China would dump the US treasury.
This two combined will pretty much cause US into recession.
US housing market already slowing down alot.

 

[Anlsvrthng]

US thinking currently. Then China would dump the US treasury.
This two combined will pretty much cause US into recession.

For what?
The US treasury preferred because is is liquid, so it is quasi cash.

If China don't want to import anything from the US then for what they can buy on this money?
We talk about 1180 billion $.
Say Japan will release yen bonds in this amount, and they will buy the US bond at discount?
This amount of money is equivalent the full two month net trading contract value on the Nikei, but considering lot of share moving between buyers several times during this period the money from China can blow up the Nike several times (that can make a lot of Japanese billionaire : ) )

 

[tidalwave]

For what?
The US treasury preferred because is is liquid, so it is quasi cash.

If China don't want to import anything from the US then for what they can buy on this money?
We talk about 1180 billion $.
Say Japan will release yen bonds in this amount, and they will buy the US bond at discount?
This amount of money is equivalent the full two month net trading contract value on the Nikei, but considering lot of share moving between buyers several times during this period the money from China can blow up the Nike several times (that can make a lot of Japanese billionaire : ) )

I said that already, if it's a zero sum mentality, you gain by opponents losing .

 

[Anlsvrthng]

I said that already, if it's a zero sum mentality, you gain by opponents losing .

Problem is I can't see how the US can loose in the dumping of the treasuries.

 

[tidalwave]

Problem is I can't see how the US can loose in the dumping of the treasuries.

by itself may not, but coupled with inflation from trade war.
US needs foreign countries to pick up the treasury to finance itself.

 

[tidalwave]

US side fails to understand China POV. Its more than economics.
This is setting a very bad precedent. If China capitulated and any other US presidents followed after Trump launching trade war anytime trying to get what it wants in the future then where does that end?

US still thinks it has more leverage, as long as China suffers enough it will blink first. That's so wrong. Chinese side not worrying most about economic suffering but setting a terrible precedent that China will have no way out now and in the future.

US will keep at it. Maybe this fullblown trade war will leads worldwide recession and then maybe it will ends.

 

[Lethe]

now I read
China plans additional tariffs on 5,207 items of U.S. products
Xinhua| 2018-08-03 22:54:34

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Weak retaliatory tariffs will only embolden those in America who believe that, given enough pressure, China will fold. Retaliatory tariffs should be calibrated to be equivalent to those imposed by the US.

 

[SDWatcher]

I suppose China is expecting that trade with the US would arrive at a new equilibrium, where US brands and hard-to-replace Chinese imports, would be exempted from tariffs, and all other Chinese imports would be minimized. Any agreements would only be signed after the new equilibrium canbe seen, as the US is expected to abandon any agreements, less than what they believe, they can extract from the trade war.

And as such, China isn't particularly obligated to repond in similar amounts of tariffs, because it really won't matter until the new equilibrium canbe seen. Please keep in mind that, tariffs are detrimental to both sides, where imports would become more expensive for the consumers and sales would become less for the importers. The US shooting itself on the foot, doesn't mean China needs to reciprocate in similar magnitudes.

 

[advill]

According to Confucius "It is only the WISEST and the very STUPIDEST who cannot change" - guess who they are in a Trade War? Getting worrisome for most countries. The world will be dragged into calamity if there are arrogance & stubbornness displayed by any of the leaders & their advisors. "Gad Damn it"

 

[Tam]

In my opinion, at least need 3 yrs. Read my other post why 3 years

Trump was hoping for quick result. That's why he escalating so much in just short time. He wants concessions before Nov election.

He wants a distraction because the Mueller investigation is closing on him.

He's already losing some Republican support, as the Koch brothers have turned on him.

China doesn't literally have to do anything or exercise options other than increasing tariffs on US imports. By options I mean like taxing US companies, dumping Treasury Bonds, etc,. It only needs to just stop buying new bonds and let existing ones mature, but the effect of this is gradual. But most importantly it only needs time for Trump to cook himself as he makes enemies everywhere, as the Koch brothers have turned against him, his former lawyer is now singing, Manafort is on trial. Treasury interest rates are already expected to rise, July's numbers show job growth the lowest its been for the year. China can open another front by using North Korea, embarrassing Trump's diplomatic efforts there. China can make Trump lose by denying Trump's objectives, which is to reduce the trade deficit, which is something it doesn't have to do anything at all, since the US is inherently structured to deficit. At the end of June, the US trade deficit is at the highest its ever been.