Trump raises tariffs again ...
China has made it clear it will fight "to the end " as the trade war escalates. Announcing tariffs on a further $75 billion of U.S. imports, clearly directed at the U.S. farmland, Trump responded with a further hike to 30% on imports from the East.
The tit-for-tat escalation is putting pressure on the U.S. economy. The Fed has issued a clear warning, the trade war is a threat to growth.
White House advisors are seriously concerned about the disruption of the economic cycle and the dislocation of the run in to the election just over a year away. Trump talked of a further round of tax cuts. Later recanting, making it clear, tax cuts are off the table. To proffer greater stimulus would be to admit a slow-down was in place. An admission too far, for the President at this stage in the cycle.
Trump continues to demand more rate cuts from the Federal Reserve, 100 basis points would be best. The Fed failed to oblige. "As usual the Fed did NOTHING" tweeted the President, "My only question is, who is our biggest enemy, Jay Powell or Chairman Xi".
The trade wars are escalating and threatening to extend to a decoupling of the U.S. and China. "Our country has lost trillions of dollars with China over many years. They have stolen our Intellectual Property at a rate of hundreds of Billions of Dollars a year. They want to continue but I (the special one) won't let that happen."
"We don't need China, and frankly would be far better off without them" said Trump. "Our great companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies home and making your products in the U.S.A."
"Build that wall, bring them home, send them back. I hereby order the world to fall into line and will outline the route map at the G7 meeting in Biarritz". Yes it promises to be a humdinger.
Trump is floundering. His inability to make deals is apparent. Jobs are not returning to the U.S.A. They may be leaving China but are en route to Vietnam, Bangladesh and other beneficiaries of Trump economics. The U.S. is losing the trade war, American voters will pay the price. This week, the Congressional Budget Office warned of the $1 trillion dollar deficits and huge debt burden to be placed on generations ahead. The trade deficit will continue to increase.
The US Chamber of Commerce has made it clear, Tariffs have been bad for the economy. Negative consequences include higher prices for consumers and businesses at home with retaliation by foreign governments damaging the prospects for exports.
Voters are turning against tariffs. A recent poll, by NBC News and the Wall Street Journal found that "two thirds of Americans support the idea of free trade". Democrat and Republican majorities now express favorable views toward free trade. Trade wars are not so easy to win after all, the clear warning to the White House but will Trump heed the warning ...
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