US China trade war latest news: America Is likely to win Trade War

us china trade war latest news

US China trade war latest news

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No one can claim to have mastered the markets fully and anyone that does lay claim to such a title should be avoided like the plague.   For example, after QE all the rules changed and many time-tested indicators simply ceased to work because the operating environment had changed forever. The markets were suddenly hit with a force that they had never been hit with before.  A fed that was determined to destroy any shred of free-market forces left in the market.  This surprised everyone, and it even caught us off guard initially.  Many so-called experts refuse to accept that they made a mistake or could be wrong. Bull Markets Vs Bear Markets & Arrogance

US China trade war latest news: America Has The Advantage

The reality is a bit more complicated. In a trade war with China, the U.S., if it’s smart about it, could “win,” or least make sure that China loses more. In fact, as Michael Pettis, a professor of finance at the elite Peking University in Beijing, explains, “the dirty little secret of trade is that for diversified economies with large deficits (such as the U.S.), a trade war can actually be positive for growth, at least in the short run, as long as the intervention is done correctly.” (He and others argue that the U.S. should focus on reducing the amount of money from abroad that flows into the country to rectify trade imbalances.)

When it comes to trade wars, many reflexively invoke the infamous Smoot-Hawley tariff of 1930. That measure helped bring on the Great Depression by accelerating a contraction in global trade. The reason this tariff was so monumentally stupid: The United States ran massive trade surpluses—much like China does today. Its domestic economy could not absorb everything it produced. So it exported the difference. At the time, Pettis notes, “the U.S. had the highest absolute trade surplus in history.” Full Story

US China trade war latest news: Experts Favour US

If one were to borrow a military analogy, the first round of the U.S.-China trade war is either a skirmish or a probing attack, as the amount of the two-way merchandise trade affected by the tariffs is about only 10% of the total U.S.-China trade. But everyone knows that the main battle will be joined soon. Besides the additional $32 billion merchandise trade targeted for punitive tariffs ($16 billion of exports for each country), U.S. President Donald Trump has threatened to retaliate by levying tariffs on all Chinese exports to the U.S. ($505 billion in 2017).

Despite their outward firmness and rhetorical bravado (President Xi Jinping has vowed to “punch back”), Chinese leaders must be deeply worried. The rupture of Sino-American relations in the last few years is undoubtedly a strategically calamitous development few in Beijing anticipated. This is true even though Chinese foreign policy behaviour since 2010, most critically its island-building in the South China Sea, bears most of the responsibility for turning the world’s most important bilateral relationship away from engagement toward confrontation.

But the costs of the concessions needed to stabilize Sino-American relations go beyond the number of extra goods China pledges to import from the U.S. or even the perceived loss of face for Xi. Ultimately, China will not only have to give up its state-capitalist model, the root cause of Sino-American trade tensions but also curtail its geopolitical ambitions and put on hold its challenge to American preeminence. Full Story

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