There was a lot of trade war talk at the end of last week. In fact, on Friday, some pundits said the trade war officially began. Last Thursday, President Trump said the US may ultimately impose tariffs on more than a half-trillion dollars' worth of Chinese goods, and a round of tariffs went into effect. The United States began collecting tariffs on $34 billion in Chinese goods. China implemented additional tariffs on some import products from the United States immediately after US tariffs took effect, according to Chinese state media.
The stock markets shrugged it off. Both the NASDAQ and Dow were up over 100 points. In his latest podcast, Peter Schiff said the markets seemed to be saying, "Who cares about a trade war? Bring it on!"
America is going to win the trade war because we've got the least to lose because we've got the biggest deficits, right? Everybody is talking this thing up."
But Peter said when you look at the products both countries are slapping tariffs on, it becomes clear which one is the industrial powerhouse and which one is basically a third-world country masquerading as an economic power. Here's just part of the list of Chinese products that Trump wants to tax American citizens for buying Peter read off.
- Aircraft tires
- Nuclear reactors
- Boat motors
- Aircraft engines and engine parts
- Air and gas compressors
- Industrial heating equipment
- Industrial scales
- Boring machines
- Construction vehicles
- Oil and gas drilling platforms
- Plows, mowers and combine harvesters
- Meat processing equipment
- Paper-making machinery
These are the things that the Chinese make and are sending us. You know what China is imposing tariffs on us - Chinese good? Soybeans, pork, fish, orange juice, whiskey, I mean, this is stuff that you grow … Look at what we make. We don't make anything. I mean, we have a few things, but mostly it's what we grow. The businesses that are most impacted by the tariffs in China are the farmers - agriculture - because our agricultural products will be less competitive in the Chinese market than maybe the agricultural products of Australia or South America or Canada."
Interestingly, one of the major US exports to China that the Chinese plan to levy tariffs on is gold. Yes. America sends a lot of gold to China.
The Chinese should really increase their imports from America by buying more of our gold. Right? Because obviously, that's going to benefit them because they can be buying gold as they're getting rid of their dollars."
Peter said the point is that China is now the industrial powerhouse with real manufactured goods while the US is more like a colony of China. As a result, the US is not in a position to win the trade war. China can buy food and beverages from anybody it wants.
What China has is far more valuable than what we've got. They have all these manufactured products that are important … All we're doing is raising the prices that Americans have to pay to import the products that our inefficient economy is incapable of producing."
We've been saying for years that we have a bubble economy. Donald Trump even campaigned on that fact, calling the stock market a "big, fat, ugly bubble." But now the Republicans are saying everything is great, we have a "Goldilocks economy," things are humming along. Ironically, the left has started talking about the economic bubbles.
So, here's the $64,000 question. Will the trade war finally pop the bubbles?
It just might. Even if it's not the trade war, something will eventually pop the bubble. And as Peter said in another podcast, at that point, Trump is going to be the fall guy and America may find itself on the path to full-blown socialism.
In this podcast, Peter also breaks down the June jobs report and talks about the minutes from the June Federal Reserve meeting.