{"id":131456,"date":"2018-08-06T07:20:28","date_gmt":"2018-08-06T11:20:28","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=131456"},"modified":"2018-08-06T06:57:11","modified_gmt":"2018-08-06T10:57:11","slug":"is-trump-truly-winning-the-trade-war","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2018\/08\/is-trump-truly-winning-the-trade-war\/","title":{"rendered":"Is Trump truly winning the trade war?"},"content":{"rendered":"
August 6, 2018<\/div>
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Article by ForexTime<\/a><\/p>\n

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Escalating trade tensions between the U.S. and China remain the financial markets\u2019 hottest topic.\u00a0 President Trump seems to be celebrating winning the first battle of this war, saying that \u201ctariffs are working big time\u201d in a Tweet on Sunday. He believes that they will enable the U.S. to start reducing the large amount of debt accumulated throughout Obama\u2019s administration. Trump also cited that the steep fall in Chinese equities as evidence that tariffs are working. In his opinion, they will make the U.S. much richer than it currently is and that \u201conly fools would disagree\u201d.<\/p>\n

The tariffs so far are approximately on $85 billion of imported goods. Assuming a 25% tariff, it would raise $21.25 billion. This number represents 1.33 % of the $1.6 trillion in additional debt President Trump has accumulated since taking office in 2017 and only 0.1% of the current $21 trillion in total debt. So, it doesn\u2019t seem the imposed tariffs would reduce the American debt substantially.<\/p>\n

In my opinion, a large portion of the tariffs will be paid by U.S. consumers and I also expect CPI figures to begin reflecting these higher prices, especially if Trump\u2019s administration imposes additional tariffs on $200 billion of Chinese goods. Rising inflation leads to higher U.S. interest rates, translating into higher cost of borrowing and debt servicing. Several U.S. companies have cut their profit forecast as a result of these tariffs, especially car makers; shares of GM, Ford, and Fiat Chrysler fell sharply after announcing their results. Other U.S. companies affected by Trump\u2019s global trade war include Tyson Foods, Harley Davidson, United Technologies, Caterpillar and Coca-Cola, among several others.<\/p>\n

This explains why the S&P 500 failed to reach a new record high, despite 81% of companies so far managing to beat their profit forecast in one of the best earning seasons in history. Given that we\u2019re almost at the end of earning season, trade wars will return to dominate the headlines. The next big risk is likely to be the U.S. midterm elections in November. I think there\u2019s a high chance that the Democratic Party will take over the U.S. Congress and end the Republican single-party control. This won\u2019t be good news for equities, and I expect to see rotation to non-cyclical stocks and an increase of cash in investors\u2019 portfolios.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

Disclaimer:\u00a0<\/strong>The content in this article comprises personal opinions and should not be construed as containing personal and\/or other investment advice and\/or an offer of and\/or solicitation for any transactions in financial instruments and\/or a guarantee and\/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.<\/em><\/p>\n

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\"Forex-Time-Logo\"Article by ForexTime<\/a><\/span><\/strong><\/p>\n

ForexTime Ltd (FXTM)<\/strong> is an award winning international online forex broker regulated by CySEC 185\/12 www.forextime.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Article by ForexTime Escalating trade tensions between the U.S. and China remain the financial markets\u2019 hottest topic.\u00a0 President Trump seems to be celebrating winning the first battle of this war, saying that \u201ctariffs are working big time\u201d in a Tweet on Sunday. He believes that they will enable the U.S. to start reducing the large […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-131456","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/131456","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=131456"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/131456\/revisions"}],"predecessor-version":[{"id":131467,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/131456\/revisions\/131467"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=131456"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=131456"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=131456"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}