US VS G7

[Altair]

https://www.newyorker.com/news/our-columnists/harley-davidson-announcement-shows-the-folly-of-trumps-trade-war

But the President’s bluster couldn’t disguise the fact that his trade war, which some Wall Street analysts initially wrote off as a quixotic diversion, is getting serious—and that it is already hurting many American companies. The makers of Levi’s, Jack Daniel’s whiskey, and Tropicana orange juice are among the other businesses whose products have been hit by sizeable E.U. tariffs.

Next week, American farmers could join the list of victims. These days, China is a major market for American food producers, and, on July 6th, the Trump Administration is set to levy tariffs on a range of Chinese manufacturers. The government in Beijing has said that it will retaliate by imposing duties of fifteen per cent on a wide range of American food products, including soybeans, cashews, almonds, apricots, strawberries, and other fruits. Pork products, which are very popular in China, would be hit with a tariff of twenty-five per cent.

Just as Trump is personally driving the U.S. protectionist agenda, Xi Jinping, the Chinese President, is directing the Chinese response—and he seems to be in no mood to back down. “In the West you have the notion that if somebody hits you on the left cheek, you turn the other cheek. In our culture we punch back,” he told a group of Western C.E.O.s last week, according to a report in the Wall Street Journal.

Back in March, Trump claimed that trade wars are “good and easy to win.” The American employees of Harley-Davidson have already discovered that isn’t true. How long will it take the President to learn?

A few things to note. Nobody is blaming the countries that are hitting back with their own tariffs.

Second, nobody, yet, is backing down when hit with US tariffs. most seem more than content to hit back.

Third, to date, instead of helping american businesses and jobs, it's only harming them. We shall see how things progress in the future, but as of right now, this trade war doesn't seem "good" or "easy" to win.

 

[tomahawk6]

Don't worry Altair the US now has 2 supervolcanos brewing,one in the NE US and the other at Yellowstone.We're coming North. ;D

 

[Altair]

Don't worry Altair the US now has 2 supervolcanos brewing,one in the NE US and the other at Yellowstone.We're coming North. ;D

If either go up, the ash in the atmosphere will create a lot of global cooling. Canadians are heading south.

 

[tomahawk6]

If either go up, the ash in the atmosphere will create a lot of global cooling. Canadians are heading south.

I wont live to see that day.But in the US we are used to Canadians flocking to Florida and Mexico.

 

[Remius]

I wont live to see that day.But in the US we are used to Canadians flocking to Florida and Mexico.

When did Mexico become a state?  ;D

 

[Altair]

New Mexico?

 

[tomahawk6]

Mexico is warm and the beer is cold,its great as you might have seen on HGTV.

 

[Remius]

I thought it was full of MS-13 types.

 

[CBH99]

If either go up, the ash in the atmosphere will create a lot of global cooling. Canadians are heading south.

I'm actually factoring a Yellowstone eruption happening in the near future - next 1 to 3 years - into my contingency plans.  Not remotely kidding.

Conspiracy theorists & alarmists aside, there's a terrifying number of well qualified scientists pointing out a large number of changes happening right now, that all indicate an eruption is relatively imminent.  (Relatively being the next few years, at best.)

Australia & New Zealand.  Opposite side of the world & opposite hemisphere...best bet. 

 

[Altair]

I'm actually factoring a Yellowstone eruption happening in the near future - next 1 to 3 years - into my contingency plans.  Not remotely kidding.

Conspiracy theorists & alarmists aside, there's a terrifying number of well qualified scientists pointing out a large number of changes happening right now, that all indicate an eruption is relatively imminent.  (Relatively being the next few years, at best.)

Australia & New Zealand.  Opposite side of the world & opposite hemisphere...best bet.

global cooling isn't going to be limited to north america or hemisphere.

The closer to the equator the better.

 

[tomahawk6]

The PM slapped a tariff on Chinese steel today.

 

[Remius]

The PM slapped a tariff on Chinese steel today.

Not yet.  Probably next week.  A counter measure to avoid dumping as a result of US action.  Europe will be doing the same.

 

[Brad Sallows]

Cheap steel and steel dumping was already a problem; to some people, a short trade war (steel only) to tighten the market might be OK.

When assuming that importers can simply replace imports under tariffs with imports not under tariff from elsewhere, do not assume that all suppliers have infinite goods and infinite transportation capacity.  And if nation A imposes tariffs on US goods, don't assume other suppliers won't take advantage of the situation to hike prices.

Too many people making assumptions about who will "have to" cave first is why the spiral continues downward.

 

[Altair]

Cheap steel and steel dumping was already a problem; to some people, a short trade war (steel only) to tighten the market might be OK.

When assuming that importers can simply replace imports under tariffs with imports not under tariff from elsewhere, do not assume that all suppliers have infinite goods and infinite transportation capacity.  And if nation A imposes tariffs on US goods, don't assume other suppliers won't take advantage of the situation to hike prices.

Too many people making assumptions about who will "have to" cave first is why the spiral continues downward.

Im sure the global economy is going to face some major headwind with all of this going on.

I would prefer if this wasn't happening at all,  trust you me.

 

[daftandbarmy]

China's economy seems built on pretty shaky ground, and the mythical 'Chinese saver' won't come to the rescue. If their economy collapses because of a Trade War, real war might follow:

"And what do we actually find when we look for the mythical Chinese saver in the real Chinese economy, rather than in the macroeconomic assumptions? Bank balances offset against enormous, rapidly rising, bad debts, a property bubble out of all contact with reality, a closed capital account to prevent money draining overseas while it still can, and an unregulated shadow banking sector where vast pools of notional value endlessly gyrate on air currents of uncertain origin. Against this backdrop, expecting the Chinese consumer to be the next big global growth driver seems like a hope destined for disappointment, for there is no Chinese saver at the end of anybody's rainbow, just an ever growing lake of unpaid bills. And then, of course, there is the Chinese government, relentlessly cracking the credit whip in search of a growth target they can neither afford, nor afford to miss."

https://www.forbes.com/sites/douglasbulloch/2017/04/26/the-myth-of-chinas-excess-savings-is-weighed-down-by-excessive-debt/#200f3e3b458a

 

[CBH99]

What would war accomplish though, if the Chinese economy collapses?  Serious question.

I've always understood war in the context of taking territory away from an adversary, or containing them within a certain country or geographic area.  (Gulf War 1990, taking over Iraq.  Vietnam, containing the North.  Korea, the same.  Gulf War 2.0, taking over Iraq.)

What would be accomplished in a war due to one or two major powers having their economies collapse, because they are so interconnected?


"So we sunk a bunch of their ships, and shot down a bunch of their planes.  And they did the same to us.  Aaaaaannnndddddd...oh yeah, we're both still economically f**ked." 

 

[Altair]

China's economy seems built on pretty shaky ground, and the mythical 'Chinese saver' won't come to the rescue. If their economy collapses because of a Trade War, real war might follow:

"And what do we actually find when we look for the mythical Chinese saver in the real Chinese economy, rather than in the macroeconomic assumptions? Bank balances offset against enormous, rapidly rising, bad debts, a property bubble out of all contact with reality, a closed capital account to prevent money draining overseas while it still can, and an unregulated shadow banking sector where vast pools of notional value endlessly gyrate on air currents of uncertain origin. Against this backdrop, expecting the Chinese consumer to be the next big global growth driver seems like a hope destined for disappointment, for there is no Chinese saver at the end of anybody's rainbow, just an ever growing lake of unpaid bills. And then, of course, there is the Chinese government, relentlessly cracking the credit whip in search of a growth target they can neither afford, nor afford to miss."

https://www.forbes.com/sites/douglasbulloch/2017/04/26/the-myth-of-chinas-excess-savings-is-weighed-down-by-excessive-debt/#200f3e3b458a

fortunately for the chinese,  they have been loaning money like they are the iron bank,  and can call in their debt from the good ole USA.

 

[SeaKingTacco]

fortunately for the chinese,  they have been loaning money like they are the iron bank,  and can call in their debt from the good ole USA.

And if the US refuses to pay?  Serious question.

 

[Remius]

And if the US refuses to pay?  Serious question.

https://www.thebalance.com/what-happens-when-a-country-defaults-1978981

End results could be:

Banking crisis
Monetary crisis
Financial crisis
limited or no access to future credit

China being the biggest creditor.

 

[Altair]

And if the US refuses to pay?  Serious question.

Nothing good.

Long story short,  the money the USA owes china isn't a direct government to government loan,  its through Treasury bondd, which is managed through the international markets. To refuse to pay china back would mean defaulting on those treasury bonds.

If the US tried to default its debt and refuse to buy back those treasury bonds China holds, China could simply sell it to a third country whoever wants it. The problem is the price will drop rapidly since there are huge amount of bonds in China’s hands. China will suffer a significant financial loss.

But the loss the US government will suffer is way worse. Modern economy is built and running on the basis of credits. That's why credit rating agencies like Moody are taken very seriously by various governments.

US borrowing costs would skyrocket,  as america would be seen as untrustworthy, capital will flee as the dollar is no longer seen as a safe currency,  and the global markets will tank as investors flee the uncertainty in the US,  and by extension,  chinese markets.