Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

SWOT Analysis: Gold Is Now 85 Times More Expensive Than Silver
By: Frank Holmes

Why Are Wages So Low
By: Keith Weiner

GoldSeek Radio: Dr. Raymond Moody and John Williams, and Chris Waltzek
By: radio.GoldSeek.com

Technical Scoop - Weekend Update September 24 2018
By: David Chapman

What Comes Next
By: Adam Taggart

China for the Trade Win?
By: John Mauldin

US/Global Stocks, Commodities, Precious Metals and the ‘Anti-USD’ Trade
By: Gary Tanashian

Central Bank Gold Purchases Now Control 10% Of The Total Market
By: Steve St. Angelo

Good, Bad and the Not-So-Ugly in Gold
By: Rick Ackerman

Gold Seeker Weekly Wrap-Up: Gold and Silver Find Modest Gains on the Week
By: Chris Mullen, Gold Seeker Report

 
Search

GoldSeek Web

 
US-China Trade War Escalates As Further Measures Are Taken


 -- Published: Monday, 19 February 2018 | Print  | Disqus 

– Trade war between two superpowers continues to escalate
– White House likely to impose steep tariffs on aluminium and steel imports on ‘national security grounds’
– US may impose global tariff of at least 24% on imports of steel and 7.7% on aluminium
– China “will certainly take necessary measures to protect our legitimate rights.”
– China is USA’s largest trading partner, fastest-growing market for U.S. exports, 3rd largest market for U.S. exports in the world.
– If the U.S. continues to escalate its trade actions against China, experts say retaliation is likely.
– Global markets are unprepared, investors should invest in gold to protect portfolios

President Trump has long accused China of ‘one of the greatest thefts in the history of the world’ and he campaigned hard on the issue during his run for the White House. So, it is no surprise that his administration are doing something about what they view as an unfair trade set-up.

Last week commerce secretary Wilbur Ross announced the possible ‘global tariff of at least 24% on imports of steel and 7.7% on aluminum after investigations into trade in both metals determined that import surges seen in recent years “threaten to impair [US] national security.”’

Unsurprisingly China have responded, calling the US reckless and confirming that they would take steps in order ‘to protect our legitimate rights.’

There is a lot at stake here both financially and politically. In 2016 the two countries did $578.6bn worth of trade and both are seen as global super-powers competing for hegemony in an increasingly polarised world.

Brewing for some time

At the end of 2017 Trump warned that he would be taking tough measures on China who he sees as an existential economic threat on his country, “We are declaring that America is in the game and America is going to win,”. At that point Trump had done more talking than actually doing anything to impact trade with China.

The China Foreign ministry responded:

“We urge the United States to stop the strategic intention of deliberately distorting China and abandon the outdated concepts of Cold War thinking and zero-sum game, or else it will only harm itself.”

2018 has been quite different with two separate sets of announcements regarding tariffs and trade with China. The first focused on solar panels, the latest on industrial metals. Both are major exports and sources of income for the Communist country.

With this in mind, it is unlikely that the Chinese super-power is going to take these moves lying down or that global financial markets will not be affected. But, in the meantime they will likely bide their time:
“China has lots of cards to play but is in no rush to play them,” said Xu Hongcai at the China Center for International Economic Exchanges, a government-affiliated think-tank in Beijing. “For now there is small-scale trade friction, not a trade war. Our moves have always been defensive. We will not escalate the situation.” 
As reported in the FT.

Trade war or war of words?

For now the trade war is unlikely to go too far past a war of words, on China’s side. They have other tools up their sleeves which could impact the US economy but not be seen as a full on defensive against America’s trade policies.

For now, all they have done is announce that it is investigating U.S. exports of sorghum and imposing measures on styrene, which is used to make plastic products. These measure are unlikely to go too far, for example Chinese farmers need American soybeans to feed their livestock.

But there are other areas China could make things sting a little too.

The country is one of the top five buyers of US cars, currently. By 2022 it is expected to contribute to over half of the world’s car market growth. The government could easily instruct Chinese citizens to no longer buy US cars, hurting the latter’s automotive industry.

We also see huge spending from China when it comes to tourism. By 2025 Chinese tourists are forecast to spend $450bn on vacations abroad. The US is increasingly benefitting from the 130 million Chinese tourists that venture into the world each year.

However the biggest tool they have up their sleeve, away from trade policies is the selling of US debt, of which it owns more than $1tn. As Jim Rickards reminded us, last week:

China leaked an announcement last month that the People’s Bank of China was considering allocating its reserves away from additional purchases of U.S. Treasury securities. That should be taken not as an immediate threat but as a shot across the bow indicating how China could retaliate for U.S. tariffs or other trade penalties.

This new trade war will get ugly fast and the world economy will be collateral damage.

Global implications

Whilst the US begins to fight against globalisation and China tries to embrace it, both are forgetting how intertwined it makes the world. A trade war between the two countries will not only impact them but also emerging countries in Asia.

Consider the steep 30% U.S. tariffs on imports of solar panels and washing machines, announced at the end of January. Capital Economics issued a stark warning about how this could affect the rest of the world’s emerging markets:

Countries in Emerging Asia export more to the US than most other emerging markets (Chart 2), and more generally have been among the biggest beneficiaries of globalisation in the world. Any moves towards protectionism would deal a blow to the region’s most trade-dependent economies such as Singapore, Taiwan and Vietnam. Korea would also be badly hit if instead of trying to renegotiate the Korea- US Free Trade Agreement (KORUS), the US completely withdrew from the deal.

There have been multiple warnings and theories from experts about how a trade war between China and the US will end. Possibly the most insightful is from Edward Wong, the New York Times’s former Beijing bureau chief. In a recent essay, he concludes:

“[China’s] Communist Party embraces hard power and coercion, and this could well be what replaces the fading liberal hegemony of the United States on the global stage. It will not lead to a grand vision of world order. Instead, before us looms a void.”

Be prepared for the unprepared

In truth no-one knows how the trade war between the US and China will escalate. Both countries need one another but they are also both led by men who believe in the singular power of their own countries, across the globe.

As we saw from the markets’ reaction when China leaked they may move away from US Treasuries, the financial order is not quite prepared for a major division between the two countries.

From the two announcements by the Trump administration in the last fortnight, it is possible that the trade war could get ugly very fast. Should this happen the the world economy will be the battle ground on which is it is fought.

Now would be an excellent opportunity for investors to prepare their portfolios for volatility and stock up on gold as a safe haven.

Recommended reading

China, Russia Alliance Deepens Against American Overstretch

Gold Prices Rise To $1,326/oz as China U.S. Treasury Buying Report Creates Volatility

Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat

News and Commentary

Gold inches up on weaker dollar, inflation outlook (Reuters.com)

Australia, U.S., India and Japan in talks to establish Belt and Road alternative: report (Reuters.com)

Stock volatility: back with a bang and here to stay (Reuters.com)

Japan Stocks to Gain Amid Holidays; Dollar Higher (Bloomberg.com)

Gold Bull Market To Start In 2018? (InvestingHaven.com)

Theresa May’s Brexit Vision Is Starting to Take Shape (Bloomberg.com)

‘No Cash’ Signs Everywhere Has Sweden Worried It’s Gone Too Far (Bloomberg.com)

Pound Faces ‘Make or Break’ Week in Timing of BOE Rate Increase (Bloomberg.com)

Gold Prices (LBMA AM)

19 Feb: USD 1,347.40, GBP 961.10 & EUR 1,085.47 per ounce
16 Feb: USD 1,358.60, GBP 964.61 & EUR 1,086.47 per ounce
15 Feb: USD 1,353.70, GBP 962.21 & EUR 1,084.45 per ounce
14 Feb: USD 1,330.75, GBP 959.74 & EUR 1,077.77 per ounce
13 Feb: USD 1,329.40, GBP 955.04 & EUR 1,077.61 per ounce
12 Feb: USD 1,321.70, GBP 955.19 & EUR 1,077.45 per ounce

Silver Prices (LBMA)

19 Feb: USD 16.72, GBP 11.92 & EUR 13.46 per ounce
16 Feb: USD 16.84, GBP 11.97 & EUR 13.49 per ounce
15 Feb: USD 16.83, GBP 11.98 & EUR 13.49 per ounce
14 Feb: USD 16.58, GBP 11.97 & EUR 13.43 per ounce
13 Feb: USD 16.61, GBP 11.94 & EUR 13.46 per ounce
12 Feb: USD 16.43, GBP 11.86 & EUR 13.39 per ounce

https://news.goldcore.com/

 


| Digg This Article
 -- Published: Monday, 19 February 2018 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2018



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.