Trade wars: update

fedescolari (58)in #money • 7 years ago (edited)

Hello friends,

today I would like to give you an update on my view of what is happening with the noisy TRADE WAR chatters.

Two days ago Gary Cohn resigned from his role as US Economic Advisor, he is a highly regarded professional, especially in Wall Street, given he used to be President of Goldman Sachs Inc.
The Man resigned mainly because of Trumps' crazyness (I could say) when Mr President decided to increase the volume on Trade tariffs noise.

The question that arises is: will countries impacted retaliate vs the USA with other tariffs on US imports?
For Europeans, most probably yes
For China though, it is a different story, China will, in my opinion, retaliate indeed, but it will not do so by raising tariffs on trade etc. It will do so by inflicting tactical pain on companies (US ones) that operate in China and / or are highly exposed to the Chinese market.

For example, when South Korea decided to deploy a U.S. missile-defense system on the Korean Peninsula in 2016, China shut down the Chinese operations of Lotte Corp, the Korean conglomerate. The company paid a tough price as its stock price declined as much as 40%.

I think China could easily take a similar action with U.S. companies (Apple, Boeing, General Motors, etc)
The Chinese government understood that by restricting the sales of specific goods and generally disrupting business operations, it can convince US firms to make noise in Washington and push Trump to back-off.