The tariffs are already having an effect on the wallets of Americans. But very soon, the economic tax and burden could go beyond tariffs on imported goods and China could decide to simply stop exporting necessary items to the United States.
It only seems to go from bad to worse. Since the Trump administration officially levied tariffs on $200 billion worth of Chinese imports Monday, China responded with similar tariffs, but only targeted $60 billion worth of U.S. goods in exchange. There is already a large trade gap between the US and China, and only so many items China can actually tax. But they can hit the US harder and make this whole debacle even more painful for the average American. Don’t worry though: the wealthy ruling class will be just fine.
According to 10 news a CNN affiliate, China’s state media has portrayed the trade war as an effort by the US to constrict China’s economic and technological rise. Given that perspective, it’s unlikely the Chinese government will be eager to give any ground in the escalating conflict which puts Americans directly in the crossfire. But that doesn’t mean anyone should assume that China will be willing to just roll over and give up.
China has other methods of retaliation open to it. The country could opt to prop up domestic companies hit by the tariffs, organize consumer boycotts, or even block exports of rare earth metals and other valuable goods to the US, the latter of which could be the most devastating. Simply put, according to CBS News, China still has “bullets” to fight president Donald Trump’s trade war, but every decision will impact the American consumer or worker, and not the government.
The most obvious way that China could retaliate against the US would be by reducing its purchases of American Treasuries or by selling some of the $1.18 trillion in its possession. Overall, China owns almost a fifth of the U.S. national debt currently held by foreign countries, according to Finance & Commerce.
“Non-tariff measures are a wildcard, with sales restrictions now a risk,” UBS strategist Keith Parker wrote in a note to clients. China’s state-dominated and heavily regulated economy (much like that of the US) gives “authorities” an arsenal of tools to disrupt US companies by withholding licenses or launching taxes, antimonopoly, or other investigations. Beijing could also slow down customs clearance, delay visa applications, or use health and safety rules to stifle operations, some economists said according to CBS News. Either way, neither government will pay the cost of enacting a trade war. The burden will be for the Chinese citizen and American citizens to carry as their governments punish them for problems created by the ruling class.
Just when everyone thought it couldn’t get much worse, it can. And Chinese billionaire Jack Ma, Alibaba Group’s chairman, warned investors that this trade war will last longer than most anticipate.
“The tariffs are already having an effect on the wallets of Americans.”
Yet consumer confidence numbers just hit an 18 year high.
So apparently it isn’t a negative effect of any significance so far.
I personally hope China and the USA continue to raise tariffs on each other until all trade has ceased. This would be a good thing in the long run. Firstly, China produces 95% shit/junk. Second, China needs us more than we need them. Third, the increase in prices to US consumers will cause incentive for new businesses to start up and produce all the things that used to be produced here; this will eventually cause job growth and a stronger economy. Fourth, China is our enemy and should be treated as such; they are belligerent/ hostile to USA. Fifth, and most important, I don’t buy much of anything except fuel and I never, NEVER buy ChiCom shit. I am dirt poor and I don’t think this will effect me any more than it will effect the rich. I support all and higher tariffs on China.
I have to agree with everything you said…… The soybean prices (Tarrifs) are going to hurt the small farmer for a little while, while the gubmint will bail out the large farmer, but sometimes you have to take two steps back to move three steps forward. I like your third point the best.
I have to admit it confuses me when everyone posts “take the pain now to ensure a better future” and the second the pain comes everyone freaks out.
You want manufacturing back in this country or what?
Blocking the exports of rare earth metals from China is a complete load of crap!! China is not the single source of rare earth metals, the US has rare earth metal mines too. The only reason the US imports rare earth metals from China is due to EPA laws in our country. The US had more than one rare earth metal mine. The only reason the US mines were forced to closed was due to the high cost of meeting all the environmental laws. If market prices for rare earth metals rise, someone here in the US will be more then willing to reopen one of those mines to meet those needs.
Maybe financial wizards here (like DK)can help me.
If China sells some/all of their US Treasury Instruments, then someone else buys them, right?
How does that kind of transaction hurt or affect the US economy or Government?
Yes, those bonds would be sold on the Secondary (resale) Market and at a discount I might add … meaning that China would take a LOSS.
As part of its previous relationship with the US (pre-TRUMP) China was allowed to buy DIRECT from the US TREASURY without going through a major bank broker-dealer and paying a fee.
The sale of US Securities, even in large amounts on the Secondary Market, has NO direct impact on the US Economy or the American government. Demand for US Securities are strong and will remain that way ….. even increasing as we get closer to a major CORRECTION.
Russia sold many tens of billions of US Securities with NO effect upon US ability to float new issues. NONE. ZIP. ZERO. NADA. The Chinese $1.2 TRILLION in US Securities represents a mere FRACTION of the global market for US Securities. It is literally, too BIG to fail and is in greater demand than gold.
Don’t believe the propaganda by the dollar haters. As long as the US MIC exists, its currency will remain King. If the MIC disappears …… so will you. So there is nothing to worry about. 🙂
Say you have 40K sitting waiting to be invested. When this massive correction happens, where would the best bets be?
BJ, assuming you already have all your preps, (guns, grub, & gear …. including some silver) I would suggest that you spend $5k for small mining equipment if you are living in Denver or somewhere else in the Rockies; meaning a Keene 151S drywasher, a gold cube w/trommel, a metal detector, accessories, and then join the premiere prospecting club in your area.
No point in buying gold (which may increase exponentially in a worse case scenario) if you can produce it and if you are laid off from your job during the crisis (like you were before). This is a good way to augment your income.
You will find these people to be like minded preppers.
Given that you have a family I would hold that 40k in treasuries for safety until well after the crisis has passed and then ride the S&P Index backup to new highs, understanding that timing hides a multitude of investment sin.
Normally I would recommend that you short the markets to catch the profit as the market dives but this one has been particularly hard for even the best timers to forecast, I wouldn’t recommend that. Crashes typically come hard & fast; then there are all of the algorithms to compete against these days. Having said that, OCTOBER looms.
Better to protect your assets now, and ride the TREND up when the major correction reverses. That’s the way I would play it if I were in your position with family responsibilities.
The man who masters patience masters all things. 🙂
My wife has money in a 401 K with Charles Schwab and we have a money in savings. SO I guess talk to Charles Schwab about rearranging her 401 k and maybe talk to them about our savings and what you’ve said. Or would you recommend us trying to find investments on our own? Last week I could of made a lot buying cool holdings at 6.1 a share and selling it at a little over 22 a share…….errrrr! I have found a lot over the last 8 years, but never took the leap. Every time I would of been a winner, but was too scared. Now I have this thing in the back of my mind that when I think I find a winner and actually buy, it will go the opposite direction on me….LoL
With a wife and children, financial safety is essential. You are just now starting to build a nice little nest egg in one of the potentially most volatile markets ever. It could be lost through no fault of your own given the present financial environment and current banking law.
Remember in a worse case scenario reboot, the banksters have the authority to confiscate the cash in your accounts and give you paper under these new banking laws. I am not sure but I don’t think that Money Market Funds have any financial guarantee either. Bear that in mind.You want US TREASURIES !!!
If you lose your capital, one way or the other, rebuilding to this point again would be difficult depending on future variables like jobs, health, etc. Charles Schwab is top notch, but have you thought about your wife switching to a physical gold 401k / IRA ? Preservation of capital is job one. Consider also that WW III is on the horizon, just a few years out and plan for that.
I like your interest in opportunities that catch your eye, but if my experience has taught me anything it’s that there is always another great investment opportunity around the corner and down the block. They will just keep coming and you will be better prepared for the next one as each one teaches you something.
Once upon a time about thirty years ago, Chase and Citi were both willing to give me $50 million for a leveraged buyout; and I still have the Funding Letters to prove it. The seller did not understand what he had for sale, but I did and he was the CFO for a international Fortune 500 company.
Unfortunately, he wanted me to explain to him why two Money Center Banks would be willing to give me that kind of money when I didn’t have bus fare out of town. I had to walk away from that opportunity even though I would have made $25 to 30 million on it over ten years. Had I schooled him on my plans for the acquisition, he could have left the company and done it himself. I walked away.
You gotta know when to hold ’em and when to fold ’em. Google Garth Brooks “Unanswered Prayers” on Youtube. 🙂
You’re welcome. I do what I can. 🙂
BTW BJ, after I walked away from that deal I located my mine, which was 20 times better than the buyout would have been and its value went IMMEDIATELY to my bottom line.
Had I succeeded with the leveraged buyout, the acquisition would have taken me to another region of the country and I would never have made my discovery. Go figure.
Suggest you find and develop a new hobby there in Denver. Read the literature, watch youtube videos, and educate yourself if you are so inclined, by watching “Ask Jeff Williams” on youtube as he is particularly well informed, well educated, and highly entertaining.
Good luck. 🙂
We need tariffs, the US lost the trade war years ago thanks to B Clinton and every “President” since. I know first hand, in 1995 I was making $92,000 a year as a R&D Engineer in Silicon Valley. Then the “Free Trade” agreement from Clinton took effect. Was out of work in 1996. Not enough room for the rest of the story, but essentially I’ve been struggling to survive since and it just got worse and worse as the years went by.
In 1985, when we had tariffs, the Trade Deficit with China was $6 Million! (https://www.census.gov/foreign-trade/balance/c5700.html) We need the tariffs to bring the US economy viable once again, period. It’ll hurt at first, can’t re-do decades of losses in one year, but it’s the US’s only hope of an economic future.
“China responded with similar tariffs, but only targeted $60 billion worth of U.S. goods in exchange.”
That’s it. China has MAXED OUT on the number of goods upon which it can place tariffs. Other actions would only hurt China MORE than they would hurt the USA.
“But they can hit the US harder and make this whole debacle even more painful for the average American.”
I call BULLSHIT.
This is a war that China cannot win. The rest of the world will be rushing to supply American consumers with everything they need and want. American Importers will source all necessary items from other countries. Simply put it will be the economic principle of SUBSTITUTION in action.
THERE IS NOTHING THAT CHINA PROVIDES THE US THAT WE CANNOT SOURCE ELSEWHERE. NOTHING !!!
Even rare earth metals can be sourced elsewhere around the world, including from within the United States, where exploitation of our own deposits have been purposely shelved while we exploited Chinese reserves.
The Japanese, for example, have discovered MASSIVE deposits of rare earth metals offshore Japan which can be mined by robotic miners. The development and exploitation of this MASSIVE deposit is already underway.
LET ME REPEAT. THERE IS NOTHING THAT CHINA PROVIDED TO THE USA UNDER GLOBALISM THAT CANNOT BE SOURCED ELSEWHERE AROUND THE WORLD ….. AND CHEAPER.
Let’s remember that the Yuan to dollar ratio is about 7 to 1. Ukraine’s HRYVNIA is 28 to the dollar. Get the picture ??? The USA will soon be buying goods and services from Poland, Ukraine, Greece and other US ALLIES.
China will fall in line or find themselves pissing in the wind. 🙂