The bottom line is slapping tariffs on Chinese imports isn't going to solve the problem.
The Trump administration raised the stakes in the trade war again this week, threatening 10% tariffs on another $200 billion worth of Chinese imports. According to Seeking Alpha, the new list appears to target Beijing's important manufacturing export industries, going after electronics, textiles, metal components and auto parts. Food and personal sectors will also be affected, along with beauty goods and makeup products.
China's commerce ministry said it was "shocked" by the latest US actions and called them "completely unacceptable." It plans to complain to the World Trade Organization. The Chinese also vowed to retaliate with a "combination of quantitative and qualitative measures."
The US mainstream doesn't seem particularly concerned about the trade war. A Reuters headline Tuesday proclaimed "Dollar strengthens as trade war fears fade, risk appetite returns."
As Peter Schiff pointed out in his latest podcast, a lot of American analysts seem to think the trade war won't have much impact because "the economy is strong." They argue that we couldn't have done this when Obama was president, but now that the economy is humming, we can afford to get our house in order and deal with the trade situation. Peter called this "utter nonsense."
We don't have a great economy. We have the same economy we had under Obama."
Peter underscored the point by citing GDP and jobs data then and now.
Those who say we don't need to worry about a trade war also cite the fact that imports only makes up about 15% of US GDP. As Peter says, that's a pretty significant chunk of the economy. You can't just dismiss that. And regardless, you can't just look at the direct impact a trade war will have on imports. You also have to consider the ripple effect.
- Source, Seeking Alpha
