Basically, if both countries completely shut down 100% of trade with one another what would happen in the first month, first year and first 12 years?
Basically, if both countries completely shut down 100% of trade with one another what would happen in the first month, first year and first 12 years?
Depends on if China also decides to back their fiat currency with some actual basis.
Macro-economist wrote:
Depends on if China also decides to back their fiat currency with some actual basis.
Well suppose they do and suppose they don’t. How do those two scenarios play out? I honestly have no clue what would happen.
President Trump's warning that he will slap $200 billion in tariffs on Chinese goods led to a small decline in stock trades in New York. The Standard and Poor 500 index was down 0.4%.
However, China's stock market plunged. It was down overall by 5% at one point. Some stocks recovered. Many did not.
Walmart would have empty shelves.
Xi Effekt wrote:
However, China's stock market plunged. It was down overall by 5% at one point. Some stocks recovered. Many did not.
China's stock market (Shanghai SE Composite Index) has been closed. It opens again at 9:30p Eastern time.
Rex Kwon Do wrote:
Walmart would have empty shelves.
A bunch of angry Trump voters who will no longer be able to buy what they need at super low prices.
Ignorant middle aged white guy wrote:
Basically, if both countries completely shut down 100% of trade with one another what would happen in the first month, first year and first 12 years?
In the short term we’d pay a lot more for goods.
In the long term we’d also pay more, how much more would depend on how other nations reacted.
Cutting off trade with a huge country that has comparative advantage in almost all low end manufacturing sectors is such a retarded idea only a complete retard would conceive of it. Fortunately we have that man.
Ana Gree wrote:
Rex Kwon Do wrote:
Walmart would have empty shelves.
A bunch of angry Trump voters who will no longer be able to buy what they need at super low prices.
The middle and upper class would also have to pay a lot more for their iPhones and other electronic gadgets, tvs, etc.
A trade war with China is a war US does not want. China holds well over one-trillion US dollars worth of US Treasury Bills, US Treasury Notes and US Treasury Bonds. Bond yields move in an inverse direction to bonds. If China were to place huge amount of bonds on market, price of US debt goes down, then bond yield increases. Mortgages are strongly correlated with US Bond yields.
Rex Kwon Do wrote:
Walmart would have empty shelves.
Don't say that. ?
Well ... wrote:
A trade war with China is a war US does not want. China holds well over one-trillion US dollars worth of US Treasury Bills, US Treasury Notes and US Treasury Bonds. Bond yields move in an inverse direction to bonds. If China were to place huge amount of bonds on market, price of US debt goes down, then bond yield increases. Mortgages are strongly correlated with US Bond yields.
You got that right but we're in one, whether we like it or not. Prior to Trump we just chose to ignore it and hope for the best. War is hell, China might try to do that but it would be a bit like shooting yourself in the foot. Similar to our tactics of slapping tariffs on Chinese imports, there are benefits and there are costs but no one knows how a war will play out. Doesn't mean we shouldn't fight back.
The precious running shoes that we all covet will cost $250 or more. Barefoot running will see a resurgence.
awesome wrote:
Well ... wrote:
A trade war with China is a war US does not want. China holds well over one-trillion US dollars worth of US Treasury Bills, US Treasury Notes and US Treasury Bonds. Bond yields move in an inverse direction to bonds. If China were to place huge amount of bonds on market, price of US debt goes down, then bond yield increases. Mortgages are strongly correlated with US Bond yields.
You got that right but we're in one, whether we like it or not. Prior to Trump we just chose to ignore it and hope for the best. War is hell, China might try to do that but it would be a bit like shooting yourself in the foot. Similar to our tactics of slapping tariffs on Chinese imports, there are benefits and there are costs but no one knows how a war will play out. Doesn't mean we shouldn't fight back.
It isn't that simple. Like one poster said we would pay more for things but I don't think "a lot". Of course that depends upon the specific item. As one poster noted, China's stock market dropped more than the US. That suggests China has more to lose. I agree with that assessment. For example, I can wear my running shoes slightly longer, run less or buy them from Viet Nam. But how will China feed a couple billion people without buying our grain? How will China handle the increase in unemployment? In my opinion, the impact on China will be much worse.
Consider wrote:
awesome wrote:
You got that right but we're in one, whether we like it or not. Prior to Trump we just chose to ignore it and hope for the best. War is hell, China might try to do that but it would be a bit like shooting yourself in the foot. Similar to our tactics of slapping tariffs on Chinese imports, there are benefits and there are costs but no one knows how a war will play out. Doesn't mean we shouldn't fight back.
It isn't that simple. Like one poster said we would pay more for things but I don't think "a lot". Of course that depends upon the specific item. As one poster noted, China's stock market dropped more than the US. That suggests China has more to lose. I agree with that assessment. For example, I can wear my running shoes slightly longer, run less or buy them from Viet Nam. But how will China feed a couple billion people without buying our grain? How will China handle the increase in unemployment? In my opinion, the impact on China will be much worse.
There have been cases of (usually) men being so mad at their bank, they commit armed robbery on the bank which foreclosed on them. Yes, a temporary high. Going into a trade war versus China is same as committing armed robbery where one does banking business. It's not wise. US would suffer worse Stagflation this nation has ever suffered. Once China in your scenario begins dumping US debt instruments (bonds), other nations will follow. US would have a severe recession with high (i) rates. Do recall circa 2009, US was able to get out of recession with very low (i) rates. That would be impossible if US were in a trade war versus China. There was an era when US national debt was held by over 90% US households and businesses. About 45% of US debt now is held by foreign nations. Both China and Japan hold over a trillion each of US debt. No trade war.
Chinese Americans would rip out their bamboo groves.
zzzz wrote:
Ana Gree wrote:
A bunch of angry Trump voters who will no longer be able to buy what they need at super low prices.
The middle and upper class would also have to pay a lot more for their iPhones and other electronic gadgets, tvs, etc.
Which would mean nothing to most of them. Trump's voters lose bigly.
Consider wrote:
It isn't that simple. Like one poster said we would pay more for things but I don't think "a lot". Of course that depends upon the specific item. As one poster noted, China's stock market dropped more than the US. That suggests China has more to lose. I agree with that assessment. For example, I can wear my running shoes slightly longer, run less or buy them from Viet Nam. But how will China feed a couple billion people without buying our grain? How will China handle the increase in unemployment? In my opinion, the impact on China will be much worse.
This isn't about running shoes.
Imagine something like an airplane that takes hundreds of people to assemble and hundreds more to design, test, etc. The plane's materials/parts get an extra penalty when they are imported. The price of the "American" plane just went up. And now the plane manufacturer bids are noncompetitve. And now thousands of American jobs end without a government bailout.
Slowing economic activity as a result of trade wars is like throwing a rock into a quiet pond.... The consequences "ripple" through many communities far more than an idiot like Trump could possibly imagine.
Macro-economist wrote:
Depends on if China also decides to back their fiat currency with some actual basis.
False.
Go back to zerohedge.
Well ... wrote:
Consider wrote:
It isn't that simple. Like one poster said we would pay more for things but I don't think "a lot". Of course that depends upon the specific item. As one poster noted, China's stock market dropped more than the US. That suggests China has more to lose. I agree with that assessment. For example, I can wear my running shoes slightly longer, run less or buy them from Viet Nam. But how will China feed a couple billion people without buying our grain? How will China handle the increase in unemployment? In my opinion, the impact on China will be much worse.
There have been cases of (usually) men being so mad at their bank, they commit armed robbery on the bank which foreclosed on them. Yes, a temporary high. Going into a trade war versus China is same as committing armed robbery where one does banking business. It's not wise. US would suffer worse Stagflation this nation has ever suffered. Once China in your scenario begins dumping US debt instruments (bonds), other nations will follow. US would have a severe recession with high (i) rates. Do recall circa 2009, US was able to get out of recession with very low (i) rates. That would be impossible if US were in a trade war versus China. There was an era when US national debt was held by over 90% US households and businesses. About 45% of US debt now is held by foreign nations. Both China and Japan hold over a trillion each of US debt. No trade war.
China would hate to throw away their foreign reserve account value by trying to dump US securities. How about this 'tool' China has:. They direct Kim Jong Un to threaten something totally crazy unless the tarriffs are moderated? Don't think economic sanctions are the only thing on the table, for either country.