There will be no “Trade War” with China
In response to our analysis published last week ("Possibility of Trade War Strengthens the Case for Gold”), where we discussed the implications of a possible trade war and the overall state of the global economy, one of our long-time clients and friends shared with us an interesting article. It argues that due to the multi-dimensional interrelationships between China and America, Chinese brinkmanship would be self-destructive and therefore unlikely.
In the WND article by John Griffing, an outright “trade war” is described as the exaggerated conclusion of “Reagan-era think tanks zealously parroting an archaic and repeatedly disproven boogeyman of the Eastern intellectual establishment: that tariffs are inherently evil and caused the Great Depression.”
The author argues forcefully that “tariffs almost always work”. This unusual position is definitely worth a read, at least if you’re open to hearing a less conventional, but possibly not less true position. As always, the truth is not black and white; it comes in shades of grey and often turns out to be far more complex than we’d like.
In our view, the author makes some valid points. The world’s US-dollar-centric structure and dependence will certainly not unravel as quickly as some commentators would have you believe. Nevertheless, we do see the dollar’s and America’s dominance fraying at the edges. Whether you like this or not, you need to consider the implications and prepare for the potential aftermath.