No one in the financial world (and just in the street-level world) has been able to dodge on the covers and in the media that eternal debate about whether the trade war was going to harm the US or China. It is an issue that has often been exposed as a simple football match, when the truth is that it is a confrontation in which, in reality, we all lose with global trade and its widespread deterioration as a communicating vessel.
But beyond the tariffs, beyond its impact on the prices paid by the consumer, beyond the tariff brackets that are already moving to other more general levels, we have that there is another very important side effect that this trade conflict is producing : There are already companies that are emerging from China, being relocated to other Asian countries. There are even local companies that are leaving their own country, and what is more significant: there is someone giving them facilities to pack.
A war that was clear who was going to pay it, but now reveals new collateral damage that will end up being major
Well, it has already been demonstrated how it was mostly inscrutable to try to guess exactly and polarized whether the trade war was going to harm China or the United States exclusively. And it has also been widely demonstrated at this point that, in fact, the American consumer has been damaged, and in two ways.
First, because the tariffs have been paid by that average US citizen, as we anticipate that it would happen from these lines, just Trump inaugurated this harmful fashion. And secondly, because this new way of income, in which “the White House has found a new fiscal reef” coincidentally, it turns out that it is only being used to postpone a (desperately) desirable return to the sustainability of public accounts Americans.
The latter is not a minor issue, because the multiannual sovereign bond bubble is now added the galloping deficit in which the US is immersed because of Trump’s tax cuts, which have not met expectations of tax revenue for revitalization of the economy, and that the annual public account deficit has catapulted an exorbitant 40% in just over a year, placing it dangerously close to the barbarity of the trillion dollars. And this happens in a context in which, unfortunately, the federal debt already reaches an overflowed 106% of the national GDP.
As you can see for yourself, here the broken dishes are paid by the usual ones, especially with an over-indebtedness of public debt securities that bear the name of each and every citizen on fire. What was believed, that our politicians would somehow pay their own excesses? Where is it going to stop! Why pay anything out of your own pocket when you have millions of taxpayers to control! Taxpayers who also cannot do much more than vote to avoid the account of a debt festival whose invitation they cannot even decline.
Overall, when the disaster comes, you can even blame the next crisis on the Fed, and the matter settled. Today’s policy has become the art of assuming the responsibility of replacing the scapegoat that will be charged with the blame. It is a method like any other to perpetuate in power as long as possible, the goal in which almost all politicians end up in use, and that some “capitalist” countries have been putting into practice for five years.
But pagans apart, we have also always kept them from these lines that, given the extremely complex nature of modern economic systems, the final consequences of the US-China trade war were virtually unpredictable in its entirety. Thus, we are not only witnessing how predictably China’s exports to the US are precipitating, but there is now a second, more relevant second round phenomenon that can change the course of this war, of Asian economies, and of the world balance of powers: the war is causing the relocation of Chinese production to other Asian neighbors.