Ready to tax all Chinese imports (500 billion) Trump says

[Cuddles]

https://www.bbc.com/news/business-44898629

"I'm ready to go to 500," he said in an interview with the CNBC channel.

Mr Trump's comments come before the most recent round of US tariffs has had time to take effect.

Last week, Washington listed $200bn (£150bn) worth of additional Chinese products it intends to place tariffs on as soon as September.

 

[maxinger]

OK. let's see what are the list of things we could possibly trade to benefit from this trade war.

 

[dozu888]

OK. let's see what are the list of things we could possibly trade to benefit from this trade war.

the market has been 'seeing' for a while... IWM is the logical winner, more revenue for domestic oriented biz.. QQQ is the perpetual winner, tech always wins.... SPY DIA are the projected winner, because China can't possibly keep going toe to toe, which makes ASHR the loser.... however, ASHR may also forward look to the eventual capitulation.... but the China market is not investment grade anyway.

short answer is, long America.

 

[ironchef]

It is a very interesting MBA case study or an exercise in Game Theory: We tax all their imports 10%, they devalue their currency 10% so the net effect to US consumers is zero, no price increase at all.

But, from 20,000 feet, the Chinese Government is subsidizing the USG budget to the tune of $50B a year, a good thing for the US. Our export to China will be hurt but perhaps our corporate tax cut soften that effect and the $150B export to China is a tiny fraction of our GDP... Besides, if they buy soy bean from Brazil instead, we can sell soy bean to the existing Brazilian customers....

The cost of living for their citizen will go up 10% because of currency devaluation, a bad thing for them. Because of devaluation and import tax they will buy from Europe instead of the US, at a higher price, bad for them....

The wild card in this trade war is their Treasury holding. By devaluing their currency, their holding will be worth more, a good thing for them? 10% of $1,5 T is $150 B more buying power. What if they exit Treasury? Who is going to buy? Europe? Japan? The Fed? And what are they going to replace their reserve with? Euro? Japanese Yen?

By now my head is spinning. Where are the PhD economist here on ET? I need your help to sort this out.

Now I am beginning to see why Wall Street isn't worry, yet.

 

[dozu888]

It is a very interesting MBA case study or an exercise in Game Theory: We tax all their imports 10%, they devalue their currency 10% so the net effect to US consumers is zero, no price increase at all.

But, from 20,000 feet, the Chinese Government is subsidizing the USG budget to the tune of $50B a year, a good thing for the US. Our export to China will be hurt but perhaps our corporate tax cut soften that effect and the $150B export to China is a tiny fraction of our GDP... Besides, if they buy soy bean from Brazil instead, we can sell soy bean to the existing Brazilian customers....

The cost of living for their citizen will go up 10% because of currency devaluation, a bad thing for them. Because of devaluation and import tax they will buy from Europe instead of the US, at a higher price, bad for them....

The wild card in this trade war is their Treasury holding. By devaluing their currency, their holding will be worth more, a good thing for them? 10% of $1,5 T is $150 B more buying power. What if they exit Treasury? Who is going to buy? Europe? Japan? The Fed? And what are they going to replace their reserve with? Euro? Japanese Yen?

By now my head is spinning. Where are the PhD economist here on ET? I need your help to sort this out.

Now I am beginning to see why Wall Street isn't worry, yet.

their treasury holdings won't worth more in USD... will worth more in local currency... so there is no extra buying power.

all the PhDs have been looking at this inside out left and right for a while now, and the conclusions are in the SPY QQQ IWM chart.

I sleep very well every night... I don't read news... I do but I use news as a gauge for public sentiment.... I look at charts and they tell me everything.

 

[ironchef]

https://www.elitetrader.com/et/thre...ank-for-its-one-belt-one-road-project.323112/

Here is the answer to my question of what the Chinese are going to do with all the US Treasury they hold: Spend it on infrastructures in countries around China and colonizes (economically speaking) weak emerging countries. Brilliant.

 

[dozu888]

https://www.elitetrader.com/et/thre...ank-for-its-one-belt-one-road-project.323112/

Here is the answer to my question of what the Chinese are going to do with all the US Treasury they hold: Spend it on infrastructures in countries around China and colonizes (economically speaking) weak emerging countries. Brilliant.

actually it's not going very well and the public is not supporting as the money can be better spent to enhance quality of life in rural areas... the routes are going thru some of the worst shit hole places on earth, with volatile governments and no commercial credit history.

the whole thing is mostly an export of infrastructure capacity... the real estate market is already saturated... ghost cities and unoccupied condos everywhere... now all the cranes and bulldozers and construction workers have nowhere to go.

perhaps part of trumps trade war is aimed at such expansion... so not only it results in fairer trade, but to contain China, geo-politically.

this is why the timing is impeccable for Trump to start this war... the US domestic economy is in the best shape ever, while China is vulnerable with a severe internal debt issue and a over-capacity issue.

 

[ironchef]

actually it's not going very well and the public is not supporting as the money can be better spent to enhance quality of life in rural areas... the routes are going thru some of the worst shit hole places on earth, with volatile governments and no commercial credit history.

the whole thing is mostly an export of infrastructure capacity... the real estate market is already saturated... ghost cities and unoccupied condos everywhere... now all the cranes and bulldozers and construction workers have nowhere to go.

perhaps part of trumps trade war is aimed at such expansion... so not only it results in fairer trade, but to contain China, geo-politically.

this is why the timing is impeccable for Trump to start this war... the US domestic economy is in the best shape ever, while China is vulnerable with a severe internal debt issue and a over-capacity issue.

I didn't say it was money well spent.

They cannot spend US Treasury bonds in their rural areas or can they? Those rural areas cannot vote in the UN or WTO, why waste their hard earn foreign currency?

 

[newwurldmn]

https://www.bbc.com/news/business-44898629

"I'm ready to go to 500," he said in an interview with the CNBC channel.

Mr Trump's comments come before the most recent round of US tariffs has had time to take effect.

Last week, Washington listed $200bn (£150bn) worth of additional Chinese products it intends to place tariffs on as soon as September.

It would be interesting to overlay the tariff talk against stormy Daniels news and Putin news.