Thursday, April 5, 2018

Trade War...Good or Bad?

A looming trade war with China is looming. Will it be good or bad for the U.S. economy. That might depend on how you look at it. There will be those who feel it will hurt the U.S. economy and there will be those who fell it will help us. One thing is for sure if it starts....it will get worse before it gets better.

Hurt the U.S. Economy:

-Agriculture and manufacturing will be hit and lose sales.
-Fewer cheap products for consumers.
-More expensive raw materials.
-Regional encampment and conflict.
-Depressed stocks as companies as sales decline.
-Isolationist ideas take hold.
-Constant conflict and underbidding by both parties fighting for markets.

Help the U.S. Economy:
-Find new markets and stop focusing on China.
-Chinese will be starved for our technology.
-Instead of investing in China companies may invest home.
-Companies may be forced to adapt and get better.
-New AI and digitization investments that reduce products.
-Improved patriotism.
-Mining more of our own natural resources.

In the long run it is possible that the U.S. may take a big hit in the beginning and adapt to the new market realities and improve its long run position. Yet that is anyone's guess. With all their facts and figures economists really don't know. They look to history to determine the future but they are often not one-for-one comparisons. It could be the death blow to our global supremacy that has been slipping or it could force us to get better and rejuvenate to a higher platform of existence.

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