Crazy news from Trump World yesterday-- all chaos all the time: his lead lawyer quit or was fired; National Security Advisor H.R. McMaster was fired, to be replaced by war-monger John Bolton (who wants to start wars with North Korea and Iran); more prostitutes were telling their stories about Trump; Trump is ready to start a trade war with China... and in response to all this-- and more-- the Dow dropped 742 points (2.9%).My financial advisor sent her clients a note blaming the crash on "concern raised by proposed tariffs and the threat of future trade issues with China that could affect global growth... The potential for rising interest rates coupled with increased tariffs has generated concern among some investors despite strength in the underlying domestic economy and labor markets... [I]nvestors are concerned that the proposed tariffs could lead to retaliatory tariffs or broader trade disruptions. For the financial markets, it’s been a back-and-forth between unfavorable trade policy moves (e.g., the steel and aluminum tariffs) and the partial walking-back of those moves (e.g., exempting Canada, Mexico and other nations from those tariffs)... Thursday’s announcement to impose tariffs on Chinese goods creates uncertainty for domestic and global economies... As the United States and China open up trade negotiations, Mills believes the most likely outcome is that the market will start to recover if China takes a measured response to mitigate the impact of the proposed tariffs."Trumpanzee, in an executive memo, instructed U.S. Trade Representative Robert Lighthizer to levy tariffs on at least $50 billion of Chinese imports, citing allegations China violates U.S. intellectual property. China's Ambassador, Cui Tiankai, wrote that "We don't want a trade war but we are not afraid of it. [China] "will certainly fight back and retaliate. If people want to play tough, we will play tough with them and see who will last longer." He said Trumpanzee's rush into a trade war with China make "no economic sense" because it "will affect the daily life of American middle-class people, the balance sheet of American companies and the indexes of the financial market." The first American products targeted by China are pork and aluminum products.Mike Snider, writing for USAToday reported that Trump's foolish bull in a china shop attitude towards China will make our phones and laptops cost more. If Trump follows through with his bluster we're looking at slower U.S. growth output-- something like $332 billion over the decade.
Apple's iPhones and other smartphones, computers, washing machines and other goods could all have higher price tags.And that, in turn, could lead to lower productivity and U.S. growth, which could also hit consumers' pocketbooks, experts say."Consumers will pay more, but the more important hit is there’s less consumption by business and organizations who use these technologies to become more productive," said Robert Atkinson, president of the Information Technology & Innovation Foundation. "Therefore, productivity grows more slowly, the economy grows less and wages grow less. Overall (gross domestic product) grows less."...[T]he president's willingness to seek guidance from U.S. industry groups is a "welcomed first step," said Gary Shapiro, president and CEO of the Consumer Technology Association, in a statement.“Unfair trade practices must be addressed, but the solution is not to put a new tax on U.S. businesses and force consumers to pay dramatically more to access the technology products they need," Shapiro said. "Increased tariffs and trade wars risk the nearly 2.5 million American jobs associated with trade involving technology products. Such a move threatens U.S. economic growth and wipes out the benefits of our recent tax reform."...The Telecommunications Industry Association agreed that even though China had engaged in unfair trade practices, tariffs on tech products may be short-sighted. “The proposed tariffs of 25% on information communications technology goods would make it more expensive to expand and upgrade American communication networks," said Cinnamon Rogers, TIA’s senior vice president of government affairs, in a statement. "Companies, governments and individuals would find it harder to access an essential productivity tool."