Thank you for your compliment😊 as for your post, this was very detailed and easy to understand so thank you for that as well! It makes a lot more sense to me now. Have they had talks about dropping this nonsense? It seems like it is probably hurting us more than China..
My guess would be that some of the Republicans in Congress are trying to get Trump to end the trade war because they understand that it's damaging the economy and hurting some of the groups of people that typically vote Republican. From everything I've heard though, it's not easy to convince him of things. I'm not sure he believes that the trade war is bad for the economy. He's trying to blame the slowdown that seems to be starting on the Federal Reserve chairman for not lowering interest rates - even though rates are at extremely low levels already and still helping to stimulate the economy. (Personally, I think interest rates are already too low and should not be cut now, but that's a different story.)My guess is that the trade war will only end when Trump believes that ending it is in his best interest and that he can claim success. (That doesn't mean it has to actually be successful, just that he can claim success.) Perhaps he's starting to lay the groundwork for that. He apparently said recently that China had reached out to him and wants to talk more (which is why the stock market jumped earlier this week), though China has denied that. It's hard to know what the real truth is, but if in fact he's making a false claim about that, it could be that he's starting to work on how he can end the trade war without any improvement in the trade situation while making it appear to his supporters that he's scored a great victory by having done it.I agree with you that it's probably hurting the US more than China, so I hope something like that happens - and the sooner it happens, probably the better it is for the US and really the entire world economy.
Thank you so much for your detailed explanation! I hadn’t thought of the idea that maybe he is just trying to end it with no real victory. Can you explain what you mean by federal reserve interest rates? I know I should definitely understand that concept but I sheepishly don’t. I haven’t paid attention to politics until recently.
I don't know what he's thinking or doing, but he never seems to admit to having made a mistake and always claims that whatever he's done has been a big success, so I'm confident that however this ends, Trump will claim victory and blame someone else for it not being even more successful. Some things about him are unpredictable but that part is very predictable. So if someone is able to convince him this was a bad idea and he should back down, I'm almost certain that he will spin it as a great success even if nothing has really been achieved.Regarding the Federal Reserve, that is the central bank of the United States. You can read more details about it here: https://www.federalreserve.gov/aboutthefed.htmBasically though their job is to keep the US financial system stable. One part of that is to keep inflation from getting too high while also trying to keep the economy strong so that unemployment rates stay low.One of the main tools they have for doing that is what's called the "Fed funds" rate. That's basically the interest rate that banks can charge each other when they make loans to each other. You can read more about that here: www.bankrate.com/.../federal-funds-rate.aspxBanks then set the rates they charge for loans (like mortgages or business loans) based on that.
Generally, when the economy appears to be weakening the Fed will cut the interest rate, making it less expensive to borrow money and making it easier for people and businesses to borrow money to buy things or build things like factories or office buildings, which in turn stimulates the economy and helps keep it from getting too weak. They can't keep the rates too low for too long though because if the economy gets too strong (sometimes called "overheating"), then prices start rising at a faster rate. High inflation is almost always bad for the economy, so normally the Fed will raise interest rates when the economy is doing well to keep inflation from getting too high and also to allow them to cut the rates again the next time the economy weakens.I think the long term average for the Fed funds interest rate is something like 4%. During the last serious economic downturn about 10 years ago, they cut the interest rate all the way to very near 0 in order to try to keep the economy from getting too bad. They kept it there for quite a few years before finally starting to raise it. It's still not back to the normal 4% though and they just recently cut it because of concern that the trade war will weaken the economy. My worry is that since the rates are already lower than average, they won't be able to reduce them a lot to stimulate the economy when we do go into the next recession and that might mean the recession gets really bad. So that's why I think the rates should be higher than they are now.
Having a bilateral trade deficit does not mean that it is actually unfair lmao.There is a trade deficit because the Americans simply consume a lot from China. If that decreases, the trade deficit decreases.
@tartaarsaus I'm not talking about the deficit. I'm talking about the tariffs. LMAO
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Another poster said something about China declaring a trade war in 2015? How does that tie in?
China is demanding their goods be accepted in the US w/o any tariffs. That means cheap goods for us, but hampers US trade to China because China imposes tariffs on our goods sent there. Effectively we have a major trade imbalance, where the US buys roughly $500 billion MORE from China than we send to China.China is a horrid trade country. They lie, cheat, and steal whatever they want. They need their hands slapped BIG time, since this has gone on for decades. Trump is finally the one to do the dirty work of getting our trade with China better balanced. That WILL mean higher prices for US citizens and businesses - at least in the short term.The thing is, Chinese manufacturing is shoddy at best, compared to American manufacturing standards. My son works at a machine shop making high precision medical tools. He said he noticed a major improvement when his company started buying American made steel for the parts. The milling was better, easier, and he was able to meet the tighter level tolerances more often.
Is he just aiming to ensure Americans don’t buy Chinese products? Or what is the point of doing that?
The "point" is that it would hurt Chinese sales in the American market. However, that's simply just not been the case. The Chinese just drop the price of the product and it's been a net-neutral for them. Conversely, American farmers and producers are getting killed by the tariffs in China and losing hundreds of millions of dollars.
The US owns the majority of the world market. That’s not leverage?
@TonyBologna25 That's a very open and general statement that could be interrupted many different ways. Can you elaborate on what you mean by that statement?
@TonyBologna25 US owns the Dollar , so we have the upper hand , until we don't , then US will be a third world country
@WTFever 👌🏻 plus the Chinese in artificially lowing their currency which also gives them an unfair advantage, Trump is the only one willing to do something, other then viture signal.
@JimboGB I know, but I wanted short, sweet, and as simple as possible.