Observation of the current trade tension in the world.
The US started the trade tension for the following main motivations:
- Cut trade deficit
- Cut finance deficit and debt
- Attract companies back to the U.S.
- Improve U.S.’s competitiveness in manufacturing.
- Make the domestic economy booming so that US’s market becomes very attractive. (Done)
- Lower the unemployment rate so that the financial-desadvantaged have good job opportunities and enough financial cushion. (Done)
- Get politicians behind the strategies. The timing of the trade war is the key. It should be before the mid-term election, but not too far before, so that nobody in the key states would go against the trade war too much since Trump won the election with balancing-trade promise.
- Synchronize the trade negotiations with multiple countries. The tough posture against China would scare the other countries so the US would get good trade deals. On the other hand, it is easy to make the other countries to align with the U.S. and against China in the trade war, so that they have the access to the US market.
- The tax earned from tariff would be used to subside the industry who are the casualty of China’s retaliation, such as the agriculture.
- The real target is China. The others are pluses. It is easy to get some good trade deals with the others using the trade war with China.
- The tension and potential economic risk could delay rate-hike. It will make the debt interest low.
- The tension makes US treasure bond attractive, even China may threaten to stop buying US debt and even selling US treasure bond.
- RMB cannot depreciate suddenly, since China wants to use RMB to trade oil and other resources. It might depreciate slowly.
- Trade war will escalate. If it doesn’t, Trump will make it escalate.
- The pressure on Trump to stop would not be significant since the current political and economic environment favors the trade war.
- China will not back down, even they should, at least not till it is out of control.
- Trump will try to moderate the trade war’s impact on regular people. But everyone will be effected.
- Investors will leave China. Trump will make sure of that.
- Robotics in manufacturing would become hot. There will be a lot of opportunities in the U.S.
- Even though hot money leaves China, investment in industry robotics, among other high-tech such as VLSI and IC, AI would still be well-funded by the state.
- More fierce competition in AI and robotics globally.
Trade balancing act will be signed into law or added into WTO allowing incremental trade tariffs on unbalanced trade, such as 5% tariff allowed over 30% trade deficit of total export in the previous year, 15% for over 60%, and 25% for over 100%.