[1andrew1]

Interesting analysis in the FT comments section from JRibeiro which is derived from Michael Pettis, Trade Wars Are Class Wars

The US has significant a public deficit and an equally relevant trade deficit (the two usually go together). As a consequence, public debt is reaching worrying levels. In fact, the biggest risk to the world economy, some years down the line, is another GFC due to a collapse in confidence in US Treasuries and in the US Dollar.

The usual way to solve the deficits would be to increase taxes domestically. This would directly reduce the public deficit, and would also reduce the trade deficit, via reduced consumption.

But this approach is not politically feasible in the US, and the best example of that is the Biden Administration - they left a 6% public deficit when the economy was booming.

The Trump Administration is instead applying tariffs. It’s a form of consumption tax, the US consumers will pay some of that, but foreign producers will share the burden as well, if nothing else, through reduced quantities sold.

The countries that have been running trade surpluses with the US should be taking a constructive approach to the problem - the US deficits are not a problem just for the US, they are a significant risk for the stability of the world economy. This is the attitude that the EU is taking right now.

However, the aggressive approach taken by the US, and the size of the tariffs applied is worrying and may create excessive dislocation in the world economy.

https://www.ft.com/content/5a262286-...f-5dd26c1fb1e3