Replies

What?

The Wall Street Journal thinks we should have let China rip us off forever because standing up to them might ‘cost’ us in the short run?

I guess they would tell their children to hand over their lunch money to the school bully too...

The WSJ would sell their own mothers out.

China has been at a 20 year Trade war with us. All President Trump wants is reciprocal trade, and that WSJ has a melt down over it.

Guess they want communist China to continue to screw the U.S.A. over.

Sorry WSJ.... Go pound sand!

It is impossible from reading that portion of the Wall Street Journal article available to me to say how much of the slowdown was alleged to be attributable to the tariff war and how much to other factors also cited in the article such as:

1. "Tariffs on Mexico" (now lifted)

2. "exports to Huawei" (now partially lifted)

3. "historic flooding across the Midwest" (these floods not expected to recede?)

4. "Declining exports mainly reflect a slowdown in global growth." ("Mainly"? How much of the slowdown is attributable to the trade war and how much is attributable to other factors?)

5. "capital flows from China falling 87.9% " (my understanding from back of the envelope arithmetic tells me that the bulk of capital inflows reduction from all nations is due to loss of Chinese investment-an inevitable reaction of any adversary of any war)

6. Unmentioned as a potential cause of slowdown in business investment is the very serious issue of Federal Reserve interest rate hikes in this period.

Finally, the really bad news is the slowdown in the economy below 3%, a figure I think Donald Trump believes is the minimum necessary to avoid being absolutely swamped by deficits and debt. Remember his campaign plan for the economy was designed to grow our way out of these deficits.

This slowdown, however, is more likely the result of interest rates than these trade wars, but this article (or the portion available to me) does not help us understand the cause.

Big changes are happening, and they move at different speeds.

Quarter to quarter, the effects will be mixed.

In Q2, inventory replenishment was slow, so it will have to catch up later. What was a drag this quarter, can produce a rebound boost in the next (at least part of this quarters slowdown was borrowed last quarter, as businesses stocked up ahead of tariffs though).

Also, in Q2 the trade balance was a drag, as China rapidly slowed purchases of American agricultural products. They can coordinate fast moves like that, because power is so centralized there. The reality of the trade situation however, is that the US tariff actions will have several times the impact, but will spread over a longer time. So again, the same factor that was a drag last quarter, will likely provide a boost in future quarters.

The bottom line is that we won’t see straight line progress quarter to quarter, or even year to year. The imbalances were developed over more than a quarter century, with mountains of investment capital sunk, and concrete poured.