American economy, with trade war will LIKELY be damaged. As Americans worry, Tweety tosses crumbs to consumers, taking flat screen TVs off the war table.
That is the "good" news.
Trade wars are more than balancing trade numbers, more than being taken advantage of, if that were ever entirely true, and not just about having more TVs, cheaper food, and goods in our pockets for a while . . . or less if things go poorly . . .
Trade wars have led to wars that kill people and destroy nations!
"What Will Be the Outcome of Trump's Trade War With China?"
One analysis shows the White House's proposed tariffs will result in the loss of over 300,000 jobs.
Author: Dwyer Gunn Publish date: 6 July 2018
https://psmag.com/economics/what-will-be-the-outcome-of-trumps-trade-war-with-china
"At 12:01 a.m. on Friday, the Trump administration's tariffs on $34 billion worth of Chinese imports went into effect. China retaliated immediately, imposing equivalent 25 percent tariffs on over 500 types of American imports. China's tariffs primarily target agricultural goods and auto parts—the two industries that dominate the Midwestern states where President Donald Trump's trade policy has garnered so much support. The implications of this economic tit-for-tat could be huge: China's ministry of commerce already declared it "the biggest trade war of economic history so far."
The impact of a trade war? Everyone loses EXCEPT ULTRA RICH.
"The full effects of a trade war are difficult to predict and depend heavily on the specifics of the initial and retaliatory tariffs imposed. But according to modeling from the Tax Foundation, a non-partisan research group, the tariffs already enacted by the Trump administration will reduce long-run gross domestic product (GDP) by 0.6 percent (approximately $15 billion), wages by 0.04 percent, and result in the elimination of over 48,000 full-time jobs."
"The U.S.-China Trade War Is Finally Here: What Will Be The Cost To America?"
Sara Hsu 6 July 2018
"Such a trade war is likely to take a heavy toll on the American economy. The tariffs that policymakers have been threatening to impose would not only have a negative impact on the trade component of growth, but it would also spill over to consumption and investment, which means that we can expect a decline in the standard of living for many Americans."
Jobs, jobs, jobs! What is Tweety thinking as he starts this war? What are his advisors thinking as they tell Tweety we can win this war? Who are these advisors?
"A study by the Brookings Institute showed that about two million jobs might be at risk as a result of the new tariffs. It is unlikely that all of these positions will be lost, but assuming that one in four of these jobs were to result in layoffs that would leave us with 500,000 jobs eliminated."
"Hunker down: Trade war off-ramp won't appear until 2019"
By David Dollar, opinion contributor — 07/06/18 02:15 PM EDT 88The views expressed by contributors are their own and not the view of The Hill
http://thehill.com/opinion/finance/395819-Hunker-down-Trade-war-off-ramp-wont-appear-until-2019
"The aggregate amount of trade affected is moderate relative to the U.S. and Chinese economies, but for the U.S., this is the most extensive import protection since the disastrous Smoot-Hawley tariffs in the 1930s."
I feel sick . . .
"China is in a fairly good position to weather this storm. Its economy is less dependent on exports in general, and exports to the U.S. in particular, than just a decade earlier. The value added in its exports to the U.S. is less than 3 percent of its economy.
This reflects the fact that China is at the end of many global value chains, which include inputs from the U.S., Japan, South Korea and Taiwan. Some of the pain from the U.S. tariffs will hit these other economies, not China. Still, the trade war comes at a bad moment in China’s cycle.
The authorities have been tightening financial conditions and trying to rein in financial risks, so that the economy is slowing, even before it takes a hit from trade. The Shanghai stock market is in bear territory, down 23 percent from a recent high in January. This reflects a combination of the deleveraging campaign and worries about trade.
In the past two months, the Chinese currency has depreciated 4.3 percent against the dollar. This is a natural market reaction to the U.S. protection. Over the same period, the dollar has appreciated about 5 percent against a basket of major currencies.
This is one of the ironies of the U.S. trying to use trade taxes. They create uncertainty in the world and one result is that capital flows out of other economies to the U.S. In the short run, this raises the value of the dollar and largely undoes the protection.
Historically, when the U.S. introduces protection, it has typically not led to an improvement in the trade balance, rather the opposite. In the case of U.S.-China trade, the 25-percent tax means that about $50 billion of imports will be more expensive, and the U.S. is likely to import less.
But the other $500 billion that the U.S. imports will be modestly cheaper because of depreciation and the U.S. will import more. History suggests that the net effect on the trade balance will be minor. This is one reason that the direct effect on the Chinese economy is likely to be minor."
Trump will declare victory no matter what happens. As always, as Trump says, "I'll find some excuse . . . "
"What then is the off-ramp? The trade conflict is unlikely to de-escalate during 2018. If the U.S. identifies further imports to be taxed, there will be a 60-day comment period, which provides one window for negotiation. China, however, is unlikely to change its basic offer: It is willing to buy more agricultural products, energy and high-tech manufacturing if the U.S. is willing to sell.
It is gradually opening up more sectors of its economy, such as automobiles and financial services. If the U.S. persists in the trade war, then American firms are likely to be shut out as China opens up. By 2019, the negative effects of the protection are likely to be stronger while the influence of the fiscal stimulus wanes.
Do not be surprised if in 2019 the U.S. takes the offer that has been on the table, dressing it up a bit in order to declare victory."
This is not just about having more TVs and goods in our pockets for a while . . . or less if things go poorly . . . Trade wars have led to wars that kill people and destroy nations!
"Trump’s trade war threatens global peace"
Martin Kettle
https://www.theguardian.com/commentisfree/2018/jun/01/trump-trade-war-global-peace-president
"Trade war. Surely the clue is in the name. Incredible as it may seem, the United States has just declared war. Not on adversaries like North Korea, Iran or Russia. Instead it has declared war on Europe, on us. The modern world has lost the habit of thinking in a historical way about free trade.
Today’s global economy has been predicated for more than half a century on open international markets. Through most of that period, arguments over trade have been arguments about good forms of free trade – such as the tariff-free flow of products that boosts prosperity all round – versus the bad forms – such as lower labour standards, tax avoidance or the undermining of public institutions.
As a result, perhaps we have forgotten that the alternative to trade peace is not only trade war, but sometimes war itself."
Trade embargoes are different than a tariff, but a US embargo is a tool of trade wars. An embargo led to Japanese surprise attack on Pearl Harbor.
"Trade and national security are indeed umbilically linked. Each provides the conditions and stability necessary for the other. But trade can also be used as a weapon of war when states are enemies. Smith lived in a Europe where trade and military conflicts often overlapped. We don’t – at least not recently and not yet. Neither Europe nor Canada is in reality an enemy of the US. With China, it’s not so clear."
More. Finally . . . nations are bound together by trade, so what happens in a trade war? We "unbind." We lose "skin in the game" so to speak.
"Trump has chosen his road. He has forced his trade partners to respond in like terms. But the disruption that he has deliberately inflicted on Europe marks a turning point. It declares us America’s enemies. In Britain, it tells us that the Atlantic alliance is at risk of becoming a chimera. It makes a mockery of the Brexiters’ vision of a buoyant free trade deal with the US. That’s nothing but self-deceiving fantasy now. And, as Campbell-Bannerman would have recognised, it makes clear that we are Europeans."
Time will tell what all this Trump / Tweety action will bring.
