Macro economic analysis on US/China 2018/2019 Trade war

The 196 pages of Chinese goods to be taxed by the US governments are spread across 6 categories. Where US manufacturers cannot find alternative sources of supplies, price increase of end product will be expected. 

Based on what was observed in December. The ability of the US government to sustain the trade war is predicated upon the Feds keeping interest rate low. 

Taxed categories include 

  • agricultural produce 
  • textiles
  • chemical compounds
  • hardware parts
  • mechanical parts
  • electronic parts

The December 2018 US market financial meltdown can be attributed to US government tariffs to reduce demand for foreign material supplies from China coupled with Feds interest rate hike to limit capital needed to boost domestic production.

The trade war seems to serve three purposes:

  • Drive up demand for domestic supplies
  • To keep inflation in check the economy grows (traditionally a role played by Fed Interest Rates)
  • Keep China in check.

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