The dollar is sliding as US-China trade war materializes

Some analysts such as Singapore-based DBS say the U.S. economy could suffer more than China’s, as United States levies could affect American firms with investments in the country and Washington is also involved in other trade conflicts.

The US and China imposed sweeping tariffs on one another just after midnight.

What’s worse is that the Trump administration has paved no way out of this situation, said Matthew Gold, former deputy assistant US trade representative for North America.

Touching on China’s massive trade surpluses with the United States, Trump told his audience, “They’ve been killing us”.

While it’s possible to do so, it would take at least a few years to set it up, cost more per unit than production in Asia, and require a lot of carrots and sticks from policymakers to get the many companies involved to do so – for example, like the potential billion in subsidies Wisconsin gave to Foxconn to build an LCD factory there. But countries that are sending us stuff in exchange for our dollars are effectively accumulating claims on our future.

The negotiations began in August but have stalled over US demands created to discourage investment in Mexico and to shift auto production back to the United States. China ran a $366 billion trade surplus in 2017 alone.

Friday’s tariffs could just be the opening skirmishes in the war, as Trump has vowed to hit as much as $450 billion in Chinese goods, the vast majority of imports. All but Japan have imposed retaliatory tariffs.

“A trade war doesn’t have winners – our markets are interconnected”, said Sage Chandler, vice president of government affairs and global trade at CTA. The U.N. said Chinese tourists spent $261 billion in foreign countries in 2016.

“To our allies: bipartisan majorities of Americans remain pro-free trade, pro-globalization & supportive of alliances based on 70 years of shared values. “A trade war is the last thing we want to see, because we said many times that no one will benefit from a trade war”, said Lu.

The two countries have engaged increasingly in verbal sparring in recent months, but Friday’s pair of haymakers has dramatically escalated the trade dispute – and that has investors across the world worries about what comes next.

As the numbers we’ve cited make clear, there’s not much value to be gained for the USA economy or its workers from simply assembling iPhones here from parts made in Asia.

The fight could also affect other parts of China-US relations.

China’s President Xi Jinping and President Donald Trump attend a welcome ceremony at the Great Hall of the People in Beijing on November 9, 2017. In 1971, Nixon ended the Bretton Woods system, which had allowed foreign governments to convert their accumulated dollars into gold. -China bilateral trade deficit. In the years since, it has turned sharply negative.

The EU has since been reported to be considering eliminating automobile tariffs to ease the tensions.

The Bretton Woods global arrangement no longer reflects the “shared values” of todays globalists – who favor unlimited debt and untethered currency. However, I think he’s wrong for talking about the trade imbalance.

On the streets of Beijing, there were some concerns that prices would rise due to the tariffs but also a determination to support the Beijing authorities in the trade war. Domestic consumption now accounts for more than half of the country’s GDP.

Sectors which have been particularly hit by the uncertainty over the trade rift made some headway on Thursday, with autos.SXAP jumping 3.2 percent, while basic resources.SXPP rose 1.3 percent and banks.SX7P were up 1.1 percent. Although there is some general nervousness over the U.S.

American farmers and manufacturers, in particular, seem poised to bear the brunt of the effects of the U.S.

The potential retaliation has sent jitters to US businesses, prompting many to urge policymakers to roll back the detrimental measures.