As POTUS has announced that the U.S. will impose $60 billion in tariffs on China, there were unanimous reactions it was a bad news, and a few voices who were speaking of “Trump's way to enforce new trade negotiations” in the light of enormous trade deficit with China — over $500 billion! The answer came quickly…
Beijing retaliated in a trade war hiking up tariffs on more than 128 US imports, including fruit and pork. If it looks as somewhat mild answer, it's because it was first response to the new U.S. steel and aluminium import tariffs, in total worth around $3 billion. Which signals that China is ready to talk. But they have hit the agriculture sector, which means direct attack to Trump supporters. On Monday DJI fell 558.41 (-2.32%).
And what would be the topic of those talks?
The trade deficit is painful, but not as much as Chinese attack to petro-dollar. If the talks are organized, what U.S. can do? China will certainly not ditch newborn petro-yuan just for the sake of the “Empire”. Will U.S. then apply more economic pressure to it's largest creditor? And how? Ask more of the market share in China? Well, Beijing just refused. Ask penetration into Chinese banking system? That would be a way to destroy petro-yuan.
Then, the most evident first effect would be further expansion of a trade war with a bad outcome to all sides, AND probably the World economy. Here are Jeffrey Tucker and Jack Rasmus discussing consequences:
Duration: 3:03
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