The ongoing saga of a ‘brainless trade war?’

The war has not yet started but the warnings are already there. It’s not just the wine and the planes from the U.S. that may be affected. It has now been reported in media that the returning ‘slap’ from China for U.S. companies would include citrus (orange and lemons) and even pork produced in the U.S. too. Oh yeah, China is the world’s TOP consumers of pork. (due to population also lah, not just habit / preference). The report in here.  In the article, it pointed out a few companies which may be affected by China’s retaliation. Well, hopefully these companies have started planning where else to export to if the tariffs do start making their goods uncompetitive suddenly versus those from other countries. Some countries may gain from the loss of U.S. producers. Here are those largest few exporting countries in the world for orange and lemon. Perhaps some European countries could fill the gap…

There was even a study on those companies most exposed to China. Here’s the list in There are familiar names because the companies were also operating here in Malaysia. So, what are the chances that the companies may choose to ramp up their productions from Malaysia instead? 🙂  We have no idea what may happen when the ‘war’ really starts. As at now, it’s mostly battle cries from both sides. Oh yeah China is the largest buyer of soybeans from the U.S. buying one third of all the production! Hmm… Oh yeah, there’s an interesting article in (I used to read this newspaper everyday when I was studying in Bristol, UK.) The title of the article? ‘There will be no winners from Trump’s brainless trade war.’ The writer ends the article with this sentence, “Trump, as we know, preens himself as a “winner”. But from an economic perspective the old truth still applies: in a trade war everyone loses.” (I do agree with Ben Chu, the writer. Just look at how the stock markets for some clues. It’s hard to see any winner when there’s a trade war)

European nations did not feature in Trump’s tariff plans yet but the leader of the European Union (EU), Germany’s Chancelloer Angela Merkel has this to say, “We consider these tariffs unlawful,” Full article in here.  Clemens Fuest, president at Germany’s IFOInstitute says, “Past experience with tariffs is that if one country starts then there is retaliation and the overall impact is negative for everybody.” Another developed nation, Australia is the U.S.’s closest security ally and it counts China as its largest trading partner and thus it is in the middle of this potential tariff war. As at now, Australia gets exemption from the steel tariffs but the U.S. says it will MONITOR this closely so that Australia is not used as a backdoor gateway into the U.S. Here’s the article from the SydneyMorningHerald

Hopefully everything will be settled in the next few weeks. If it heats up further, I will write another article yeah. The earlier one here. Happy following.

written on 24 March 2018

Next suggested article:  Yellen: Next financial crisis not happening during our lifetime

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