Here's How a Trade War Between the U.S. and China Could Get Ugly

in #war6 years ago

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The first shot of the U.S.-China trade war went off without much of a reaction from investors. The calm may be short lived.

For months, financial markets have been bracing for President Donald Trump to follow through with threats of tariffs against China. So it came as little surprise when the U.S. implemented duties on $34 billion in Chinese imports on Friday, as planned, and Beijing retaliated proportionately.

Now comes the hard part for forecasters

Economists feel they have a good handle on the direct impact of higher duties. Tariffs raise the price of imported goods, in turn inflating costs for businesses. Those companies can fully absorb the increased cost, or pass some or all of it onto consumers. The bottom line: someone pays, prices rise, demand is hurt.
The Trump administration is currently reviewing another round of tariffs on $16 billion in Chinese goods. If the U.S. stops at duties on $50 billion in imports, and China does likewise, the hit to both countries’ economies will be modest, Bloomberg Economics projects.

Call that the neat-and-tidy trade war: both countries come to their senses, and financial markets bend but don’t break.
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Spillovers Galore

However, Trump said last week that he may expand tariffs to more than $500 billion in Chinese goods, to basically cover all imports from the Asian nation into the U.S.
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Economists say they can’t fully measure the indirect impact that could occur as the trade war escalates. A decline in U.S. financial markets could be one such element. Factor in a significant slump in equities prices, with the knock-on effect of falling wealth, and the likely hit to U.S. growth widens to 0.4 percentage point, according to Bloomberg Economics.

Chinese stocks and the currency have already taken a beating as concerns about the onset of the trade war gathered. The Shanghai Composite Index is in its longest losing streak in six years, and the yuan posted its worst quarter since 1994 last month. Policy makers have been out in force trying to shore up sentiment.

https://www.google.com.ng/amp/s/www.bloomberg.com/amp/news/articles/2018-07-08/here-s-how-a-trade-war-between-the-u-s-and-china-could-get-ugly

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Good afternoon @oclinton

I figured that I will check your latest post and show my little support by upvoting it. So here I am :)

Im also terrified with this trade war. How can it affect crypto market in your opinion?

Thank you again for your amazing support with my latest contest! I also left some small reply in your latest post about Cotton Coin.

Obviously upvoted

Yours
Piotr

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