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Friday, July 6, 2018

Trump Begins Trade War, Russia & China Respond


Trump has officially begun the trade war with China, and now Russia has also responded, ultimately, this will have serious ramifications for the global community.



President Donald Trump has been a strong proponent in advancing US job growth, but has been favoring a protectionist idealism instead of a purely capitalist position. Protectionism, naturally, leads to more government oversight in the market, and tends to prop up certain businesses who benefit from particular favors from politicians. Examples of protectionism could be the funding of Solyndra, and Fisker Motors by the Obama Administration which led to mass layoffs and even the closure of Solyndra which has resulted in the US lowing millions of dollars on a shady investment. One of Obama's many scandals...

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Propping up big steel, and big farms in the US will actually have some serious economic ramifications, especially for those who are homeless, living in poverty, or are within the lower class. Prices of goods always seem to increase when protectionism expands, protectionism is just a short term gain that leads to long term loss, especially if the investment is unsuccessful. It is a gamble. Other than domestic problems, we now have to deal with Trump's trade war which will make the situation worse.

Trump fulfilled his word on imposing tariffs on $34 billion worth of Chinese goods. China has retaliated against the Trump administration by imposing a similar tariff of 25% on over 500 US products, which includes automobiles. Russia is responding to the tariffs by subsidizing Russian alternatives to US products (like construction equipment, businesses that work with oil, gas and energy, etc). China officials have been on record stating they do not wish to have a trade war with the United States, but now that Trump is pushing their hand, China feels they, and their allies, must retaliate against a very economically aggressive American regime. Notably, not only has Trump expanded tariffs on China and Russia, Trump has also notably put tariffs on Canada, Mexico and even the European Union! Notable corporations like BMW have publicly stated that they will not be able to maintain operations with China if the Trade war expands throughout the EU.

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The trade war is a downright risky move, but some risks may have large rewards. If this plays out horribly, the reward may be a full blown hot war (at worst), and at best in a horrible scenario, we would suffer yet another global recession.

How do you feel about Donald Trump's trade war?

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