What’s next after trade wars?

My interpretation of the four strategies adopted by Trump:

1. Reduction of corporate taxes

2. Tariffs imposition

3. Tech war with Huawei

4. Infrastructure building

First one was done in 2018 and US stock market was bullish for a year but government deficits went up terribly without companies moving back from other countries to the US as calculated. This can be seen from the declining PMI. Reasons? Trump has been mercurial and he could change his rules pretty fast. It is logical for companies to adopt a wait-and-see stance instead of going headlong into expansion.

Imposing tariffs on so many countries will end up US importers having to incur some costs and US consumers the balance costs. How to make good profits? Can see that Fed Chair will be under siege on one hand from impending recession to reduce interest rates, but on the other hand from higher cost of imports to increase interest rates to combat self-inflicted inflation later. How to solve this dilemma?  Removing trade wars with all concerned countries.

The Tech war has already caused some US tech giants to retrench big numbers of workers due to the low production caused by losing the world second m/phone maker Huawei. The worries from US tech giants are increasing by the day after Xi Jinping announced the new Long March – 15-year battle plan with the US.

Infrastructure building seems to be a strategy that will not create enemies like trade wars. But where to get the money when there is more budget deficit due to the reduction in corporate taxes? Selling treasuries to other countries to raise funds? China and Japan have been the two biggest supporters of US treasuries. But when they were bullied by Trump so badly, do you think they will support the US to let Trump have more energy and resources to bully them further?

So, Trump should know by now that he has to stop his games of threatening faster than necessary as he has less time, compared to Xi's new Long March, on his side due to the preparation of his imminent presidential election campaign.

In conclusion, this can be a golden opportunity to make money if you can catch the timing of Trump's reversal of his trade wars, especially the huge one with China, and the tech war with Huawei.

Superphang
https://superphang.blogspot.sg