trump would have personally caused a global recession if he did not exempt canada and mexico. like i said, it is stupid to even threaten this possibility. he probably unnecessarily hurt business confidence and reduced 2018 GDP growth by 10-30 bps in the US and 100+ bps in canada and mexico for no reason. super smart genius.
Trump promised in his election campaign to withdraw from NAFTA and adopt protectionist policies, and he is doing just that. His approval rate has gone up by a small amount in the latest polls. Like most other politicians, his goal is to be reelected, not to grow the economy.
Lol. He was always going to exclude them which is the point I made from the onset that you simply couldn’t grasp in your rush to hysteria. He never threatened anything because he knew they would be exempt (as did most analysts following this) from the get go. Trump hurt business confidence so badly that University of Michigan and Conference Board consumer confidence as well as ISM Manufacturing PMI all hit multi-year highs in February, baseless as usual. Regardless, “hurting business confidence and curbing growth” was not for “no reason” its part of an effort to curb abusive trade practice in the same way traditional conflicts may hurt confidence for long term necessity.
By extension of your “logic” given the lower tariff rates in the US versus the rest of the world as documented by the WTO (sorry to use actual facts to shatter your reality) virtually every other major country has threatened financial Armageddon through their greater reliance on tariffs versus the US. The trade weighted tariff rate (source: WTO) applied by Canada is 3.1% versus 2.4% for the US. Those are some impressive mental gymnastics you’re whipping out to live in your alternate reality. 
One look at the perpetual current account deficit and a skim through an Econ 101 textbook would demonstrate that there was in fact good reason to anybody who’s not out to lunch. This is not rocket surgery, sorry you were so wrong as usual but thanks for playing its always fun!
K thx bye!
remember i’m not one of the crazies.
trump did not deny a tariff on canada or mexico as you are implying. he stated that a new nafta deal would be necessary to avoid said tariffs. many canadian and us businesses will now further pull back spending until nafta negotiations are complete. before the tariff scare, 1/4 canadian exporters stated that their business has been negatively affected by NAFTA negotiations. with ridiculous tariffs now on the table, economic activity will drop further, relative to base case.
all he had to say was “as a group, we should charge higher tariffs on non-NA products and use those extra dollars to redistribute in the new NAFTA with us winning the majority of those new dollars”. instead he said “we’re going to charge everybody more and if you don’t give us what we want, you’re f%*#ed”. yeah, great for business confidence across the continent.
Yes but he’s president of the US, not NA and he’s got NAFTA to negotiate.
50bil tariffs against China for stealing IP. whats going on here PA?
WW I, the Great Depression, and WW II all fell within 21 years of each other. And that’s leaving out other major conflicts like the Islamic rebellion in Xinjiang.
this better not screw up anything with my shipment of knockoff eagles jersey w/ super bowl patches coming in from china - thatll be the last straw… trump will have to pay for such egregious crimes
back in the day the quality was baaaaaaaad but now its so much better
So apparently like, all the knockoff paintings in the world come from this one chinese town:
Also pretty sure 50b isn’t going to really change the chinese given that their govt has stolen trillions in IP and handed it to domestic companies.
True, but look how young that branch manager is:
50b is 5% of our trillion annual deficit next year! MAGA!
our imports from china is about 500b so this is like a 10% tariff. if i was china. id be fuckin pissed. its time they do something crazy. like sell our bonds!
anyways i was trying to figure out who the biggest idiot in the planet is.
check it out:
It’s 25% tariff on $50B which is about 10% of imports so a net 2.5% tariff. Not a big deal especially considering they already have an overall higher tariff rate on US goods. That said, Trump has signaled this is the first of many.
US produces 40% of global soy exports (Brazil 43% and Argentina which had an awful harvest is typically 5%). China consumes 65% of the import market. This comes in a year where Argentina’s soy harvest got crushed by drought (USDA: 72% in poor condition). If you think you have the upper hand in a trade war, owning their food supply is having them by the short hairs. The mid-east is the largest importer of wheat and the US by far the largest exporter. When wheat prices rose by nearly twice in August 2010, by October a Tunisian food stand owner had lit himself on fire and when the dust settled within two years, major regime changes had occurred in Libya, Tunisia and Egypt. The golden rule of consolidating authoritarian power is make sure people aren’t hungry and Xi knows this. You also don’t need a PhD in rocket surgery to know food demand is broadly inelastic so any levies against US soy will be paid by the Chinese.
They may choose to go after easy targets like CAT, DE and BA, I’d be surprised if they didn’t.
Regarding selling treasuries, it helps to remember that doing so will mathematically and immediately result in Yuan currency appreciation that effectively mean they are putting a tariff on themselves as that’s the mechanism they’ve been using to keep the currency suppressed vs the dollar. This is Econ 101 of money supply. LOL. You got us Xi!
Also realise that China is sitting on a debt bomb with LGSV defaults expected to begin in earnest this year.
shithole countries use the usd as a reserve currency cuz no one trust their currency and historically the usd has low inflation with decent rates.
we still have low inflation, but we have shitty rates now. and should inflation rise, those who buy our bonds are fooked! cuz rates will surely follow :)!
i actually like the boj, who decided to broaden their reserve to stocks a while back. the best reserves are the best investments that have low risk and have appreciated! bonds historically are low risk as rates have been falling, this is not the case anymore.
so econ 101 needs some revisions. they prolly need to talk about short term bonds, and tips, and maybe even stocks/real estate, when prices crash.
Be that as it may, the currency effect will be far worse on China, to your point about reserve currency, the US has the liquidity and regulatory stability to roll and manage the debt. China, not so much. I take US 10:1 if it ever got bad. Plus that whole food supply thing. If we faced a real financial stress we could cut the Soy, bye Xi wave to Mubarak on your way out!
I mean, let me make it VERY simple for you:
Moody’s and S&P labeled China most at risk for a financial crisis a month ago. China acknowledges they have a debt problem and made it the top focus alongside pollution in the last 5 year plan. LGFV defaults are kicking in this year. It’s a veritable debt bomb that needs careful handling.
China is an export economy still.
US is an import economy on relatively solid footing with broad foreign liquidity.
China responds to tariffs with treasury selling = currency appreciation (on top of tariffs) for their export economy and foreign investment is already basically nonexistent there as a source of funding. One look at FDI reversals in 2015 tells you all you need to know about how investors (and the population) will react.
It’s very simply A+B+C = you lose. Maybe in 10 years if we revisit the calculus is different, but just not today.
i need an unbiased level-headed objective point of view here. yo PA where u at
Proud of you BS - taking on the academic [brainwashed] view of “free trade” with sound logic. I always get a kick when people bring up the selling of treasuries - as if China was doing this as a means of charity. Nonetheless, with tariffs being the first step, getting out of foreign affairs being step two, and rebuilding american infrastructure as #3, i could see a brighter future.
While I wouldn’t consider taking advice from highly intelligent academics that dedicate their lives to economics and the various impacts of trade as being “brainwashed,” I do agree that the arguments on USTs is pretty bogus. Investors who owns USTs are doing so because the they are seeking the risk/reward offered by the product. I don’t think they’ll change their behavior because of some external factor. I definitely don’t think they’ll “dump” them on the market to “stick it” to the US.