American Politics

Growing Trade War With China May Force America To Deal With National Debt #Trump #China #trade

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President Donald Trump on Thursday directed U.S. trade officials to identify tariffs on $100 billion more Chinese imports, upping the ante in an already high-stakes trade confrontation between the world’s two largest economies.

Reuters reports that the further tariffs were being considered “in light of China’s unfair retaliation” against earlier U.S. trade actions, which included a proposed $50 billion of tariffs on Chinese goods, Trump said in a White House statement.

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“This is what a trade war looks like, and what we have warned against from the start,” said National Retail Federation President and CEO Matthew Shay.

Forgetting the legendary resilience of the American people, Shay speculated in a statement, “We are on a dangerous downward spiral and American families will be on the losing end,” urging Trump “to stop playing a game of chicken with the U.S. economy.”

If the U.S. goes through with an additional $100 billion in tariffs, China will not hesitate to fight back and is already prepared to, the Ministry of Commerce said, reports CNBC.

“We will immediately fight back with a major response,” the representative said during a Chinese-language briefing with reporters Friday in Beijing. “We have no other choice.”

“We feel America is very arrogant. They have taken a wrong action. The result is that they will hurt themselves. If they release the list of $100 billion tariffs, China is prepared. And will not hesitate,” he added.

“We believe this is a battle between unilateralism and multilateralism, a fight between protectionism and free trade,” the Chinese Ministry of Commerce representative said. “This is not good for China, or the world. Facing this serious problem, we must fight resolutely.”

“We have prepared with a bottom line mindset and have planned detailed action. We won’t start a war, but if someone does, we will definitely fight back,” the representative said.

He added there was no merit to talk the two countries were discussing trade behind the scenes.

China’s $1.2 trillion weapon that could be used in a trade war with the US, according to CNBC.

China holds $1.17 trillion of U.S. government debt, bringing economists and investors to worry if there is a trade war, China could reduce its U.S. debt holdings as a political weapon against the Trump administration tariffs proposal.

If that happens, the dollar could fall and other countries could follow suit and sell their holdings.

If China reduces its buying at a time when the U.S. is increasing its supply of new Treasuries into the market, that could lead to a rout in the bond market.

Ironically, if China were to use the debt bonds as leverage, it would bring a spotlight onto the national debt, potentially forcing Congress to amend their spend-happy ways.

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Mr Americana, Overpasses News Desk
April 6th, 2018