US Trade War?


US Trade War?

MARSAL COMMENTS: President Trump seems determined to “Make America Great Again”. One obvious step is to reduce the trade deficit with the world. The US imports far more than it exports. The simple and fast way to do that may be to levy import tariffs on products from the main US trading partners; China and Germany.
Despite the US cabinet’s rejection of raising import duties, Trump seems to be adamant on going ahead. He may start with 20% duties on Chinese steel and other products. Will German duties follow? We will see after the anticipated confrontational G20 meeting.
In all cases, this first step is not likely to make China happy. On the contrary, if it does materialize, we could be in for a hot spell of retaliations.
In the long term, import duties do not necessarily correct a trade balance deficit, especially in items that are needed and not manufactured locally. A better strategy could be to encourage local growth through more useful spending, as opposed to excessive military budgets.

GENERALLY: Pessimistic
NEGATIVE FOR: China and the world trade. Eventually, also for the US.
POSITIVE FOR: US in the Short term.
TIME SCOPE: Medium and Long Term



One thought on “US Trade War?”

  1. The US national debt is close to $ 20 trillion and its ratio to GDP is 108%. Only four developed countries (Japan, Italy, Portugal and Greece) have higher debt to GDP ratios. Increasing investment in infrastructure will help in creating more jobs and higher growth rates and eventually reduce the debt. However, President Trump is unlikely to cut military expenditures (16% of budget) to finance his ambitious infrastructure investment program and this is why he needs more than a little help from his overseas friends. I am wondering if perhaps austerity measures, at the risk of a recession, are the only means to achieve a significant reduction in US national debt?
    I my view, a nation qualifies for greatness not by its military power and economic wealth alone but also, and more importantly, by its higher moral and ethical codes and practices.

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