Trade War with China


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Equation

Lieutenant General
Trump is just using the trade war with China or anyone else as a distraction from the constant Russian election interference and probing. For the other anti China crowd it's all about their nervousness on China's 2025 and OBOR initiative that they know will be successful under a good leadership such as President Xi can bring.

Trump Tweets 'Tariffs Working Big Time,' U.S. Trade Deficit Jumps 7 Percent In June
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Mary Papenfuss
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•August 5, 2018




The deficit tallied $291 billion in the first six months of 2018, compared with $272 billion the first half of 2017.

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Anlsvrthng

Senior Member
Registered Member
American politicians specialises in externalising their domestic problems. When America has problems at home, rather than take a long hard look at what they are doing wrong and fixing those, there are always demagogues blaming it all on foreigners, and the American public are all too happy to ‘fall’ for those lies.
And China externalising her problem as well, saying that industries / economy hit by US actions.

Why care China about the US,customs , law and so on?
What is so special in the US for China, to hang on the USA every actions?
 

Hendrik_2000

Brigadier
Holds on to your seat ! 1970 repeat stagflation. How they are going to fund the deficit if not issuing IOU aka treasury And some one has to buy those IOU. If not than it has to jack up rate (inflation)
US bond yield rise to 5% could wreck Asia’s economic year
With Asia's central banks holding massive stashes of US Treasuries, a yield rise could be devastating – and could trigger a regional panic sell
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AUGUST 7, 2018 7:03 PM (UTC+8)
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JP Morgan Chase's Chairman and CEO Jamie Dimon's prediction has many worried. Photo: AFP/Eric Piermont
Jamie Dimon just said what’s on the minds of many Asian central bankers. More to the point, he previewed the worst thing that could befall their balance sheets this year: 5% US bond yields.

The
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is worrisome because, odds are, he’s right. As Dimon said over the weekend in Aspen, Colorado: “I think rates should be 4% today. You better be prepared to deal with rates 5% or higher – it’s a higher probability than most people think.”

US Treasuries: Asset or liability?
The most immediate concern is the $3 trillion-plus of US Treasury securities sitting on central bank balance sheets. Though that mostly means China and Japan – holding $1.2 trillion and $1.1 trillion, respectively. Hong Kong is exposed to the tune of $197 billion. Taiwan owns $181 billion, India $127 billion, Singapore $108 billion, South Korea $100 billion, Thailand $67 billion, and so on.

Bond prices and yields move in opposite directions. This means that if a central bank wanted to sell dollars in the future to, say, protect local currencies, their holdings are worth less.

A 200-plus basis point surge from Tuesday’s 2.94% 10-year would have
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scrambling to sell to avoid accelerating losses. It might be too late, of course, once Beijing or Tokyo – the investment whales in this narrative – pulled the trigger on massive dollar sales. But the rush for the exits would be messy, destabilizing and hard to hedge against.


The most interesting question is what might catalyze the surge in rates. Dimon appears to be eyeing a 4% US growth rate and a sub-4% unemployment rate. The Federal Reserve is in the middle of a tightening cycle. And the US experienced a rare burst of late-cycle stimulus from December’s $1.5 trillion tax cut.

Shocks could just as easily come from the other direction. That massive tax cut by President Donald Trump’s Republican Party raised alarm bells in Beijing. In March, China’s ambassador to the US, Cui Tiankai, hinted that China might scale back on dollar-debt purchases.

Xi is not for kowtowing – or is he?
On top of concerns about fiscal losses, Beijing also grasps the leverage it has over Trump’s White House – the ability to call its loans to Washington. So far, President Xi Jinping has avoided using the so-called
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of dumping dollars to punish Trump. While it is countering Trump’s tariff arms race tit-for-tat, Beijing is treading carefully. Surging rates would hurt US consumers, reducing their wherewithal to buy mainland goods.

Even so, China’s strongest leader in decades might face legitimacy questions if he bows to Trump. Hence, a new editorial by state-mouthpiece Global Times assures all of
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. It calls Trump’s trade war “an act that aims to crush China’s economic sovereignty, trying to force China to be a US economic vassal just like Japan accepted the Plaza Accord.”

The reference here is to a 1985 deal between industrialized powers to weaken the dollar and strengthen the yen to correct perceived imbalances. It was hashed out at New York’s Plaza Hotel – which then-businessman Trump would later own for a spell. Clearly, China isn’t about to acquiesce to US complaints about a weaker yuan. Not with Beijing accusing the White House of “blackmail.”

Of course, Beijing could return the favor on Wednesday when the US Treasury auctions $78 billion of three-, 10- and 30-year debt. It’s a piece of the biggest so-called
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since 2010, a by-product of Trump’s giant tax cut. If Beijing boycotts, the bond rate the US needs to pay investors could skyrocket.


Any banker can be wrong. Look no further than Wall Street’s 2008 crash. And there are indeed holes in Dimon’s 5% scenario. He expects, for example, that the bull run in stocks could “actually go for two or three more years.”

Economic dissonance, given how surging yields might end Tuesday’s expansion? Perhaps. But when a CEO as smart and influential as Dimon raises a warning flag, it’s worth listening, whether you’re in New York or Shanghai. Bond market turmoil could be coming to an exchange near you.
 
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Tam

Colonel
Registered Member
Gold backed currencies has supply limit. You imply that limited amount of money chased by investment, again and again expressing the (in your world) limited amount of money supply

You mean the FED/treasury has a yuan exchange rate target, and try to adjust the dollar value by changing the interest rate?
It is new, I know that say China, Japan, Korea, Poland, Hungary and so on doing it, but the USA?

And where is the inflation ?

Why would be the graph different if China dump?
By the graph China already buying insufficient amount of treasury, so the FED has to mop them up.



GEEZ Man, just look at your own graph. The first is already showing a direct correlation with yield rates and inflation. You don't even know how to read your own graphs.

Now you have to understand what happened on the second graph. QE is happening to mop up all the excess debt that caused the 2007-2008 financial crisis. The economy is recovering and growing. Maybe you should be honest and show the rest of the graph that includes 2014 to 2017 where the curve flattens because the Fed is in uncharted territory and uncharted territory makes investors nervous.

Asian banks are holding too much treasuries --- there is a limit they can own. The demand for new Treasuries is low and that is causing the yields to go up so the Treasury can make the Treasuries more attractive to investors. If the Asian banks want to buy these new Treasuries, they would have to dump existing Treasuries in the market at a discount, and that competes with the new Treasuries in the market. Asian dumping Treasuries increases supply. Selling more Treasuries to cover your large deficit increases supply. Do you know what happens when supply increases? The commodity competes with itself, which results in either decreased prices and increased yields. Both are not good.

And maybe you should check that the inflation rate is now 2.9% in June, which is highest in 6 years, rising from 2.8% in May.
 

Hendrik_2000

Brigadier
Winning trade war is easy yeah tell that to the laidoff worker of this TV plant
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South Carolina Manufacturer Blames Trump Tariffs for Layoffs

JONATHAN ERNST/REUTERS
A TV-manufacturing company in South Carolina says it’s been forced to layoff 126 employees and close a plant because of President Trump’s tariffs. “The layoff and closure is a result of the new tariffs that were recently and unexpectedly imposed on many goods imported from China, including the key television components used in our assembly operations in Winnsboro,” Element Electronics wrote in a letter to the state’s Department of Employment and Workforce. South Carolina’s manufacturing industry has been particularly hard hit by the tariffs. Automaker Volvo said it may not be able to fulfill its promise to hire 4,000 employees for a South Carolina plant. Graver still, BMW told U.S. Commerce Secretary Wilbur Ross that the tariffs could put 45,000 South Carolina jobs at risk. Element Electronics said it hopes to reopen in three to six months, but is not certain it will be able to do so.

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t2contra

Major
And China externalising her problem as well, saying that industries / economy hit by US actions.

Why care China about the US,customs , law and so on?
What is so special in the US for China, to hang on the USA every actions?

Because even if China were to lose 5 and the US 10 nett, it is not in China's interest. That's not win-win. Conversely, if China lost 10 and the US 5, Trump thinks the US win.
 

LesAdieux

Junior Member
Dump the dollar for what?
Klingon Talon?


This script miss the reaction by the FED.
It is like the games played by kids, when they pretend that the invisible enemy is dumb, and doing exactly what is good for them in the game : D
Why the FED would allow the increase of interest IF the inflation and unemployment low ?
How can China manipulate the inflation and unemployment by dumping the US dollar for Klingon Talon?

I am sorry, but I can not understand this connection.


The FED print money to increase the inflation.
To make profit from the arbitrage between the FED target rate and actual market price is money printing, to create inflation.


gosh, your brain is even bigger than I thought.

you certainly have no training in either economics or finance, but you have God (Fed) on your side. all your arguments boil down to Fed is omnipotent.

this kind of deference can only come from someone once nuked by the almighty.
 

AssassinsMace

Brigadier
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Jim Cramer was one of first to say China was already blinking right after Trump's tariffs went into effect. Now he's crying foul that China seems to be on the verge of boycotting Apple in Trump's trade war. I read that China's announcement of tariffs on $60 billion worth of US goods was a sign that China was losing because it's not matching Trump's 25% on $200 billion worth of Chinese goods. China has no more products they can tariff. Then Trump announces officially a 25% tariff on only $16 billion of Chinese exports? What happened to the 10% tariff on $500 billion then changed to 25% on $200 billion and now 25% on $16 billion. Saying and doing are completely different things so it's confusing which tariffs are in response to what but it's clear Trump isn't doing what he's saying which by their interpretation is a sign of losing. They said before Trump's trade war started that Trump will implement more tariffs on China if he doesn't see Chinese hurting. Yeah but targeting Apple is somehow crossing the line making America the innocent victim. I thought the US can withstand anything China can muster... just as long as China doesn't cross lines that the US seems to get to determine. Yeah Trump winning trade wars is easy just as long as other countries accept abuse without retaliating like Trump seems to have believed was going to happen.
 

Figaro

Senior Member
Registered Member
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Jim Cramer was one of first to say China was already blinking right after Trump's tariffs went into effect. Now he's crying foul that China seems to be on the verge of boycotting Apple in Trump's trade war. I read that China's announcement of tariffs on $60 billion worth of US goods was a sign that China was losing because it's not matching Trump's 25% on $200 billion worth of Chinese goods. China has no more products they can tariff. Then Trump announces officially a 25% tariff on only $16 billion of Chinese exports? What happened to the 10% tariff on $500 billion then changed to 25% on $200 billion and now 25% on $16 billion. Saying and doing are completely different things so it's confusing which tariffs are in response to what but it's clear Trump isn't doing what he's saying which by their interpretation is a sign of losing. They said before Trump's trade war started that Trump will implement more tariffs on China if he doesn't see Chinese hurting. Yeah but targeting Apple is somehow crossing the line making America the innocent victim. I thought the US can withstand anything China can muster... just as long as China doesn't cross lines that the US seems to get to determine. Yeah Trump winning trade wars is easy just as long as other countries accept abuse without retaliating like Trump seems to have believed was going to happen.
Dude, there's a common saying that whatever Jim Cramer says to do, you do the exact opposite. He is known for his B.S. on the Street ... anyone remember his Bear Sterns call?? He is a mere CNBC celebrity known for his Mad Money nonsense.
Because even if China were to lose 5 and the US 10 nett, it is not in China's interest. That's not win-win. Conversely, if China lost 10 and the US 5, Trump thinks the US win.
China has the capacity to absorb more losses ... while the US doesn't. Remember that Trump still has a voter base ... the Chinese are banking on bleeding out America. Here's an old Chinese maxim : one must be prepared to lose 800 of their own to kill 1000 enemy soldiers.
 

plawolf

Brigadier
As a general rule of thumb, those who shout loudest for wars, be it trade or real, tend to know the least about what it actually means to fight such wars.

In the minds of most such warmongering cheerleaders, the idea of a ‘fair fight’ is when the other guy is an order of magnitude smaller and weaker than themselves, and are tied up helpless on the floor.

Even then they will probably complain that beating up on the little guy shouldn’t hurt their fists and feet so much.

The problem for them here is that China is neither a tiny minow, nor is it unwilling or unable to fight back.

Thus far it is obvious China has been going out of its way to try and prevent the trade war from happening, and is giving America every opportunity to back down.

However, Trump doesn’t do subtlety, so in my view, the best way to limit the damage of this trade war is to start fighting it like China means to win it.

As with all bullies, as soon as you show them you are not afraid of them and mean business, they stop trying to pick on you.

The trick is not to go full nuclear, but to launch a strike devastating enough to make Trump think twice about his current course, without scorching the whole earth and leave Trump with little left to loose to continue to the bitter end.
 
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