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Trump Threatens to Instigate an Economic War

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March 3, 2018 | 

Joanna Newman |  0 Comments| 

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In a series of Twitter posts, the US President has returned to one of the original themes of his election campaign: the US trade deficit with China.

The tweets came after a review of the country’s economic performance throughout the month of January and for the fifth month in a row, the United States has shown a growing trade deficit. As a result, President Trump’s tweets announced tax increases and his determination to respond to all measures that have been deemed economically discriminatory. So far, the response from financial markets has varied, however, the announcements seem to have had a positive impact on cryptocurrencies.

Stuck Between a Rock and a Hard Place


From the President himself: “When a country taxes our products coming in at 50%, and then we tax the same product at 0%, this is not fair or smart. Soon, we will be starting reciprocal taxes so that we will charge the same thing as they charge us. With an $800 billion trade deficit, we have no choice.”



With these words, the President denounced the protectionism of certain countries, namely China, who has a glaring $276 billion-dollar trade deficit with the US, an increase of 10% within the last year. Meanwhile, until March 3rd, Liu He, an advisor for China’s trade authority, is meeting with the US Secretary of Treasury to try and ease economic tensions between the two countries.

The US has continuously accused China of manipulating its national currency to strengthen it against the US dollar which is seen by the US as a way to increase economic protectionism. China has also been criticized for its lack of protection when it comes to intellectual property and, as it stands, each American tech giant has its own Chinese counterpart.

Elsewhere, Mexico is the second on the list of countries with which the US has a massive trade deficit, estimated at about $100 billion. To sum it all up, the US has a total deficit of $74.4 billion which is the highest it’s been since its 2008 recession.


Fighting the Good Fight


For Donald Trump, when other countries are profiting from the economic apathy of the US, it is justifiable to wage, what he calls, a trade war. In simpler terms, the US will follow the path of imposing reciprocal taxes on trade agreements that are unfavorable to the US economy.

As a result, the President announced a 25% increase on steel imports and a 10% increase on aluminum imports from China. Which will be a hard pill to swallow for China since they are the largest steel producer in the world with more than 50% of all trading volume. These measures will be discussed on March 15th, 2018 by an international trade commission, and if approved, the tax increases will be set in place for the next 5 years.



“When a country (USA) is losing billions of dollars on trade with virtually every country it does business with, trade wars are good and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore – we win big. It’s easy” said President Trump in one of his tweets.

Bitcoin Back in the Black


As a result, the Chinese regime has increased protectionism which has multiplied problems that already existed in the country’s cryptocurrency markets. Moreover, People’s Bank of China fears a leakage of their money supply but still, despite this, China remains a leading market in the world of crypto-finance.

Although most international markets have taken a plunge since Donald Trump’s announcement to increase taxes on metal imports from China, Bitcoin, and other cryptocurrency markets, on the other hand, have seen a brief upward trend.

This might be explained, as it was in North Korea, by citizens using virtual currencies to protect their money in the event of an economic crisis. It seems investors have been attempting to avoid fiat currencies which are too closely tied to national interests.

Still, it has yet to be seen if Bitcoin will surpass the $12,000 mark, where it has continually been met with resistance.

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