Alternative Visions – China-US Trade War: Two Steps Forward, One Step Back

Dr. Rasmus analyzes in depth the past week’s further trade tariffs announced by Trump against China ($200b) and China’s response in kind ($60b). Big  retreats in both cases in terms of tariff rates and composition (tariff exemptions)  show that real trade war not yet begun but getting closer. US investors and stock markets agree, and surge. Trump objective in latest moves: bring China back to bargaining table before US elections. Trump reduces tariff rate, from prior 25% to 10%; China also reduces, from 25% to 10% and 5%. Plus both sides exempt key products: US cuts 300 from prior list, including Apple, tech and car industries; China exempts or reduces rate on US agriculture and consumer goods (toys) for upcoming holidays. Some interesting facts re. China imports to US: 90% of $529 billion from US and foreign corporations’ and foreign-Chinese joint ventures producing in China and importing to US. (Apple and mobile phones = $40billion of the $529b. All US tech corps= $90 billion. US car makers and minerals tens of billions more).  Updates on Turkey, Argentina and other emerging markets, and financial markets that are growing more fragile. Global weak spots: Emerging markets, Italy, China stocks, and, in 2019 the UK if ‘hard Brexit’, now appearing more likely. Rasmus describes the ‘wall of money’ now driving US stock markets to historical highs, including $1.5 trillion in 2018 stock buybacks and dividend payouts.