Experts Warn of Chaos for the U.S. Economy as China Declares That “the Biggest Trade War in Economic History” Has Begun
Nothing is going to be the same after this. On Friday, the United States hit China with 34 billion dollars in tariffs, and China immediately responded with similar tariffs.
If it stopped there, this trade war between the United States and China would not be catastrophic for the global economy. But it isn’t going to stop there.
Donald Trump is already talking about hitting China with an additional 500 billion dollars in tariffs, which would essentially cover pretty much everything that China exports to the U.S. in a typical year.
The Chinese have accused Trump of starting “the biggest trade war in economic history”, and they are pledging to fight for as long as it takes.
As I discussed yesterday, the only way that one side is going to “win” this trade war is if the other side completely backs down, and that simply is not going to happen.
So there is going to be economic pain, and that pain is likely to intensify for as long as this trade war persists. U.S. businesses that will be affected by foreign tariffs are already cutting back production and laying off workers, and CNN is reporting that 1,300 products have suddenly become more expensive for U.S. consumers.
There will be nowhere that anyone can hide from this trade war, and it will ultimately affect every single man, woman and child in the entire country.
Most Americans are not paying any attention to these ongoing developments, but the Chinese sure are.
Earlier today, the Chinese Ministry of Commerce called the U.S. tariffs “typical trade bullying”, and it warned that this trade war could trigger “global market turmoil”…
“This act is typical trade bullying,” the spokesperson said, before adding: “It seriously jeopardizes the global industrial chain … Hinders the pace of global economic recovery, triggers global market turmoil and will affect more innocent multinational companies, general companies and consumers.”
China’s primary English language newspaper was even more direct with their criticism…
The government-run English language China Daily newspaper said: “The Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China.”
Here in the United States, the start of a major trade war with China really doesn’t seem like that big of a deal if you listen to the mainstream media.
Most people just seem to think that things will continue to go well for our country no matter how many stupid decisions we make. It is almost as if a lot of Americans no longer understand that extremely reckless acts can have exceedingly severe consequences.
One man that understands what is happening is the founder of the largest hedge fund on the entire planet. On Friday, Ray Dalio posted the following ominous message on Twitter…
“Today is the first day of the war with China.”
Today is the first day of the war with China.
— Ray Dalio (@RayDalio) July 6, 2018
Please note that he did not say “the trade war with China”.
The truth is that trade wars can often lead to shooting wars, and we need to hope that cooler heads will prevail.
But for now, it looks like things will continue to escalate…
But Trump has said his administration will respond to retaliation from Beijing with much bigger waves of tariffs, raising the prospect of worsening tit-for-tat reprisals. On Thursday, he suggested the possibility of tariffs on almost $500 billion more of Chinese goods.
He described the potential escalation to reporters aboard Air Force One: “Thirty-four, and then you have another 16 in two weeks and then, as you know, we have 200 billion in abeyance and then after the 200 billion we have 300 billion in abeyance. OK?” Trump said. “So we have 50 plus 200 plus almost 300.”
If we hit China with 500 billion dollars in tariffs, there is no telling what the Chinese might do.
As I discussed the other day, the Chinese could start dumping our debt or cut off our access to rare earth elements.
Either move would be absolutely catastrophic for the United States.
We don’t know how this trade war will ultimately end, but as Reuters has pointed out, “it’s going to get ugly”…
The U.S.-China trade war will be fought in the trenches, and it’s going to get ugly. The first round of tariffs hits on Friday, and U.S. President Donald Trump says they might come to cover more than $500 billion of goods. Exporters will feel the pain first, but uncertainty will also dampen investment, impede research and twist reform. It marks a moment of mourning for those who hoped the world’s two largest economies could work things out.
And guess what?
Russia just joined the trade war against the United States as well. The following comes from Zero Hedge…
Whether this is a coordinated response is unclear – and certainly on a much smaller scale – but Bloomberg reports that Russian Prime Minister Dmitry Medvedev signed a decree this morning imposing higher tariffs on U.S. products in retaliation for U.S. duties on metals imports, according to Economy Ministry statement.
Reuters reports that Russia’s additional duties will apply to imports of fiber optics, equipment for road construction, oil and gas industry, metal processing and mining, according to an economy ministry statement.
These tariffs are going to have very real consequences for U.S. businesses and U.S. workers.
Even though this trade war just started, some firms are already being hit very hard. Here is one example from USA Today…
Trans-Matic, of Holland, Michigan, shapes metal, mostly into auto parts, as well as components for door locks. It has paid higher steel costs for several months as U.S. steelmakers raised prices in anticipation of higher American tariffs on metal imports, company Chief Financial Officer Steve Patterson says.
Trans-Matic has passed along the price hikes to its auto-supplier customers, but some have scaled back orders, reducing Trans-Matic’s revenue in that key sector by 5 to 10 percent, Patterson says. As a result, the company is giving its 300 U.S. employees about five hours a week in overtime instead of their usual 10.
For other firms, layoffs have already become a reality. Just ask the largest nail maker in the United States…
In Poplar Bluff, Missouri, Mid-Continent Nail, the nation’s largest nail maker, laid off 60 workers last month. Sales plunged 70 percent after Trump placed a 25 percent tariff on steel from Mexico and Canada. When the company boosted its prices, customers defected. Now, Mid-Continent is strongly considering a second round of 200 layoffs, company spokeswoman Elizabeth Heaton says, and all 500 employees could be axed by Labor Day.
The longer this trade war lasts, the worse things are going to get.
Fighting a trade war just with China would have been bad enough. But instead, we have decided that we are going to take on pretty much the entire world simultaneously, and I don’t know if I have the words to describe how painful that is going to be for all of us.
Many Americans seem to believe that the U.S. economy is an unsinkable ship, and at this moment we are heading directly for an absolutely enormous iceberg.
Let us hope that someone is able to pull a rabbit out of a hat, because right now things are looking quite bleak.
Michael Snyder is a nationally syndicated writer, media personality and political activist. He is the author of four books including The Beginning Of The End and Living A Life That Really Matters.
The post Experts Warn Of Chaos For The U.S. Economy As China Declares That “The Biggest Trade War In Economic History” Has Begun appeared first on The Economic Collapse.
Michael Snyder is the publisher of The Economic Collapse Blog, The American Dream Blog and The Truth. You can follow him on Twitter right here.
Source: http://theeconomiccollapseblog.com/archives/experts-warn-of-chaos-for-the-u-s-economy-as-china-declares-that-the-biggest-trade-war-in-economic-history-has-begun
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Bring it on. China will collapse. We do not need their plastic crap. I back TRUMP on this contest.
I don’t need China’s shit made electronics that break right after the manufacturer warranty ends. Those poor Commie trash working their factories don’t know how to do anything right. If every Chinese made product had a quality American made equivalent, their country would be toast. Unfortunately our politicians are traitors that sucked a bunch of Communist Illuminati cock and let China sell everything under the sun on our soil while they limited or tariffed what we could sell there.
Ideas Time you are stupid
As Russian sanctions take hold, EU farmers pay the price
U.S. and China farmers pay the price wake up people
A Handful of Companies Control Everything You Buy
oh so he is stupid eh–to my thinking you make him look like einstein you moron– your a commie leftist,socialist–this is war and war aint pretty or cheap–china will blow up in a week if the usa embargoes it–i hope the usa does–they are nothing(china) but lying,cheating maggots–and you get free,need a shrink to get really free–that is total bs that a handful of companies control everything–i dealt in world trade for years,worth millions–whats your experience you idiot? euro land is going down like all commie socialists do–next is china,thieves,liars—china man is already being encircled by all the nations that surround it with the exception of cambodia,and now n korea is playing its china hand–back to its bs games–the usa has already placed huge amount of missiles around china—it will take about 10/15 hours and half of china,gone..we let them steal a lot of our tech because we placed tech in it to shut their ass off!!! so go ahead china,start a fight that you will lose–and the russians ,being a lot smarter after ww2 will just sit back and watch…..
b4 you are stupid
How could you be so ignorant, so stupid, so forgetful?
So the question how Hell do you read
U.S. and China farmers and store pay the price wake up people
I like reading everything I can whether it’s.
If anybody can put on paper what our government,
and the American government, and the Russian, Chinese…
what they are actually trying to do, and how and what they think they’re doing,
I’d be very pleased to know what they think they’re doing.
I think they’re all insane. But I am liable to be put away as insane for expressing that,
you know. That’s what is insane about it.” John Lennon Interview 6/6/1968
Cui bono?
Fuck those Communist cocksuckers in China. They are mostly responsible for the de-industrialization of America by stealing our manufacturing. They sacrificed the health of their workers and allowed them to be paid slave wages to do it. China sells way more shit in the USA than we do in their country. Just make their shit cost so much money that every Chinese manufacturing company goes under because no American in their right mind would buy it.
If anyone in the military had balls they would hand Japan a couple of nukes to drop on Shanghai and Beijing. Communism has no place in this world. China surely isn’t going to change. They only embraced capitalism to prevent their shit country from overpopulating and fucking itself into extinction.
U.S. has been trade bullied for decades robbed of our money by the biggest pirates in the world AKA globalist banking cartels whose bloodlines mirror queens and kings. Finally someone is bringing our wealth back when we were on the globalist list- due for destruction bring us down, confiscate guns and move in their dictatorship in, new world order.
Chinese NEED America, we don’t need them. Their products are CRAP. Pants, shirts, flashlights, kitchen utensils, gadgets all break within a few weeks to a year, at most.
And don’t EVER buy equipment from them where you LIVES depend on it.
In short, they are just giving you the shaft.
Why is it fair for other countries to have tarriffs on our products and we can’t on theirs?, so that each year the USA OWES everyone, thats stipid. We need to balance our budgets and it starts with trade, if trade is balanced to near zero on both sides, then we can start the long haul of budget reform by reducing out foreign debts. If this was done then we would not need any country to buy our debt. but to invest. At least now we have a negotiating tool that we did not have before called =TARIFFS i’ll drop my rate 10 if u will drop 20, get it to 0 if possible.