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The United States may not be done with threatening financial tariffs against China, continuing the back and forth the rhetoric that is leading to much uncertainty in the greater market.
As part of the economic threats made by the United States towards China are indications that tariffs can be imposed on up to $150 billion of goods imported from China. The introduction of tariffs may lead to an increase in manufacturing jobs in the United States, a point often repeated by President Donald Trump on the campaign trail, but may be a double-edged sword in that it will potentially lead to higher prices for consumers.
In addition to the trade imbalance between the United States and China are concerns regarding abuses of intellectual property by many Chinese businesses. These intellectual property abuses are not persecuted by Chinese authorities who take a more hands-off approach.
China has also been accused of propping up the businesses through state support in a number of industries and making it difficult for other global companies to compete. An example of this is in the steel industry where many Chinese state-sponsored companies will flood the market with cheap steel, making it difficult for global steel producers to survive, particularly in countries with social welfare programs that add significantly to the cost of operation.
This state support is part of China’s 2025 platform, in which the Chinese government is seeking dominance of certain key industries, a process that has infuriated many in the U.S. The United States is proposing a 25% tariff on certain Chinese exports to the U.S.
China has responded to the latest threat today by indicating that they are ready for a trade war if the United States is pursuing one. China indicated that it will protect their own interests of the United States continues an arbitrary and relentless verbal attack on their economy.
The increased rhetoric comes just days before a scheduled meeting by the Commerce Secretary of the United States, Wilbur Ross.
Although markets have taken notice of some of the earlier interactions between China and the United States in regards to these trade action, the current reaction has been muted and unobservable. If a trade war were to hit between the two countries, it might spell a large negative factor on economic trade and the stock market.
According to Steve Sjuggerud in November of 2016, the Japanese stocks were described as a “one way bet” higher. It was said that China is sliding back in to deflation. Due to this threat, Japan’s Bank of Japan says they will make inflation higher at any cost. The previous stimulus efforts. These efforts are said to continue until the long term inflation target of 2% has been reached. Since this statement, Japanese stocks are up by 20%.
The Governor of the Bank of Japan, has announced the large stimulus program the bank has. The members of the policy currently believe the prices will jump to 2% 2019 fiscal year. He feels that that may also be a good time to exit. The federal Reserve has already begun the raising of its rates. Normalization has be debated by the European Central Bank. Is is significant that Governor Haruhiko Kuroda has made these acknowledgments.
It may possibly be time for Japan to get out of the stock trade due to the stocks plummeting. Governor Haruhiko Kuroda want to not only reach the 2% goal but he want to exceed it. He calls this method overshooting and those efforts are still in plans to move forward.
It has been made clear by Governor Haruhiko Kuroda that the Bank of Japan is thinking about leaving 2019, during the fiscal year but that has not been confirmed. It is unclear what angle will be taken. At the moment, the exit is simply talk of discussion.
A plan was announced by the United States President Donald Trump to impose tariffs on aluminum and steel that is imported into the country. This will include a 10% tariff on aluminum and 25% on steel that is imported. He says that no one will be exempt from these tariffs. Congressional Republicans opposed this proposal immediately. Even members of President Trumps own administration feels the same way. The lack of support makes people feel that that would create President Donald Trump to rethink his increasing of tariffs.