What is a trade war? 101

Leaving politics right out of this, lets talk about how trade wars work. Then you be the judge of who wins and who loses. (Economics is kind of my thing)
If a country wants to protect an industry, say like steel or Aluminium, it has several options.. One, to place a tariff (a charge or tax) on any imported steel. Two, to set quota limits requiring a licence to import it. Three to subsidize the local people to allow them to sell their stuff cheaper. (Remember Farm subsidies)
Now if a nation does any one these, the oversea export country is likely to pick another product the US is selling them and do the same thing, So.. Who wins? Not the consumers.. Either way, they end up paying more for stuff made from Steel and Aluminium, and not the people trying to sell their other products, say food, which is already costing the consumers money in farm subsidies and now they still cant sell, against the other guys tariff..
So who wins?? The governments at either end, pocketing the tariff money...
That's why no sensible person WANTS a trade war.... There ARE NO WINNERS!!!

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Cierzo · M

With tariffs the consumer loses in the short term as prices get higher, but since more imported goods will be replaced by local ones, it means more jobs and economic growth in the long term.

whowasthatmaskedman · 70-79, M

Actually you are correct... As long as the money supply keeps growing, because there is no corresponding increase in production to go with the price rises. If the money supply is dries up, them what happens is a loss of consumption and GDP ..@Cierzo

Cierzo · M

@whowasthatmaskedman Exactly

whowasthatmaskedman · 70-79, M

And according to the Fed, they are going to try again to lift rates and stop printing money.@Cierzo

Cierzo · M

@whowasthatmaskedman Lifting interest rates will make dollar rise against euro and other foreign currencies, which will not be good for American exports. It looks like the FED and Trump administration are going to clash.

whowasthatmaskedman · 70-79, M

True... But since the other major currencies have all been printing money they have remained more or less in balance.. But what we have is real estate and stock prices rising relative to earnings@Cierzo P/E ratios are falling continuous as money looks for a home.

Cierzo · M

@whowasthatmaskedman Which investments are safe now? Stock market is really volatile. Cryptocurrencies? 😂. It looks like the safest investment is real estate, sadly.

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whowasthatmaskedman · 70-79, M

On this point you are accurate. The Fed simply dictates policy by raising and lowering interest rates. If rates go up. people rush to invest, and the stock market falls unless there are real value buys to be had@TotalMiss

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whowasthatmaskedman · 70-79, M

But he wants high share prices, he cant have a see saw with both ends high.. Unless of course he has a massive trade surplus.. Oh wait!! He doesn't. He has a massive trade deficit. Maybe a domestic surplus?? Nope.. Something has to give.. and if he doesn't decide, business will.@TotalMiss

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whowasthatmaskedman · 70-79, M

And this money is coming from where???@TotalMiss

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