Sex Toys, iPhones & Jeans

(No, it’s not a new Bob Dylan song!)

 

If we can take one thing from Trump’s inauguration speech it’s that America will buy American and there will be strict financial penalties and taxes for those who don’t. Or to put that another way……he announced a trade war with China.

 

Trump is somebody that has been far from consistent with any of his political messages, with one exception……China. As he has declared, China is “raping our country” and "stealing American jobs". He has promised to slap 45% tax on Chinese imports if Beijing doesn't start playing fair……a move that has led to concerns over a US - China trade war. Watching the two largest economies in the world squaring up to each other is not for the faint hearted……and there will be casualties along the way.

 

Whilst some will admire his stance on putting the US first, it seems at face value a flawed stance. Firstly, American consumers would end up paying more for Chinese made goods (sex toys, iphones, jeans, laptops, refrigerators, etc.) and will have less money to buy American made goods. Secondly, many US firms have manufacturing bases in China and would be hit by any kind of import tariffs as well.

 

So Mr Trump, it’s not as simple as ripping your shirt open, thumping your chest, shouting “American or else”……you could end up stabbing yourself in the back.

 

China's President Xi Jinping summarised the Trump chest thumping perfectly……”Nobody wins in a trade war".

 

And if history is anything to go by, then he is right.

 

Interesting times.