Invest
The trade war is a stunt
As the conflict rages on, it’s becoming clear that it’s not about the money.
The trade war is a stunt
The trade war is a mess. Markets rise and fall on Donald Trump’s tweets, while stockbrokers pray that President Xi Jinping, an inscrutable Communist Party zealot, will switch things up with a bit of free market capitalism. Bloomberg has been insisting for over a year that we are just days away from a comprehensive deal – flashbacks to the infamous “Friedman Unit” here – while Trump administration officials grandstand on Fox News.
In this environment, everybody has a prediction; everybody wants to be the Nostradamus who called the outcome by performing a comprehensive content analysis of CCP media releases to determine that Xi actually will kowtow to Trump’s demand to stop pumping subsidies into state-owned enterprises.
The fundamental misunderstanding that has shaped this sort of commentary on the trade war is that it’s about economics. Of course, that’s a logical assumption to make – you would hope that a trade war is about economics.
But as the conflict rages on, with a viable resolution increasingly unlikely, it’s become clear that economics isn’t the real game.
The word TARIFF is a beautiful word indeed
To understand the trade war, you have to understand how it’s being fought.
The cornerstone tactic of the Trump administration has been tariffs. Here’s the thing about tariffs: people know what they are. They’re taxes on foreign goods. It’s not some moderately complex economic policy that would be easier to understand if you’d had the benefit of an undergraduate level education. Kentucky coal miners know what tariffs are, as do the conservative high school students who form a larger part of Trump’s base than most analysts care to admit.
“When you are the ‘Piggy Bank’ Nation that foreign countries have been robbing and deceiving for years, the word TARIFF is a beautiful word indeed! Others must treat the United States fairly and with respect – We are no longer the ‘fools’ of the past!” President Trump tweeted on 2 June 2019.
And that’s just it. People want something that’s easy to understand, something that sounds like it’s working – tariffs.
The trade war was always about PR.
The economic positives have been few, the negatives many. Global consumer confidence has been shaken to its core, and American farmers aren’t even getting much out of it. The only real beneficiary of the trade war has been Trump, whose appearance as a strongman willing to use brute force to get his way has played well with his base. Trump can point to tariffs – which make a hell of a splash when they’re announced – and say he’s doing something. And that’s all he needs to do.
Predictions about the outcome fall flat because they use a logical, fact-based approach. That’s a mistake. The trade war is being fought by a television host and real estate developer who knows how to work a crowd, and that’s exactly what he’s doing.
Doubt it?
Turn your attention to more recent developments. Trump has opened several new fronts in what’s becoming a global trade war by imposing tariffs on Brazil and Argentina over baseless accusations they had intentionally devalued their currency. The move caught markets completely off guard, but Trump’s fans went wild. With Trump now threatening to impose tariffs on France – with little justification – it’s becoming more and more clear that the trade war is about hearts and minds, not soybeans and pork.
Stock market
Super fund investors bid to acquire Sydney Airport
A group of super fund investors has lodged a non-binding takeover bid for Sydney Airport, valuing the company at over $22 billion. ...Read more
Stock market
10 most globally held stocks revealed
Australian investors remain bullish on electric vehicles and technology stocks, according to their long-term held positions, new research has shown. ...Read more
Stock market
How ‘gamer investors’ are pushing a new wave of social responsibility
A new generation of younger retail investors are pushing a new social movement, yielding a distributive impact on the markets, most notably through the GameStop saga, two researchers have revealed. ...Read more
Stock market
ASX tipped for record high despite inflation fears
The market is tipped to shake off fears of rising inflation, with the ASX 200 now tipped to close the year at a new record high, an economist has revealed. ...Read more
Stock market
‘Commission-free propaganda’: Warning issued for retail investors
The phrase “if you’re not paying for it, you’re the product” applies just as much to stock trading apps as it does to social media networks. ...Read more
Stock market
Is the tech sell-off creating opportunities for investors?
A tech sell-off sparked by inflation concerns has seen world markets crash. But is it creating an opportunity for investors to ‘buy the dip’? ...Read more
Stock market
Government opens arms to Wall Street
In its bid to maintain Australia’s global competitiveness, albeit its firmly shut borders, the Australian government has included a measure in its recent budget to allow foreign financial services p...Read more
Stock market
Aussie market falls on US inflation
The Australian sharemarket has fallen on the bell after Wall Street experienced sharp sell-offs overnight due to hotter than expected inflation data. ...Read more
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Are property prices set to crash? Should you jump on board the fintok craze? And how to prepare for this tax time
Listen now
Stock market
Super fund investors bid to acquire Sydney Airport
A group of super fund investors has lodged a non-binding takeover bid for Sydney Airport, valuing the company at over $22 billion. ...Read more
Stock market
10 most globally held stocks revealed
Australian investors remain bullish on electric vehicles and technology stocks, according to their long-term held positions, new research has shown. ...Read more
Stock market
How ‘gamer investors’ are pushing a new wave of social responsibility
A new generation of younger retail investors are pushing a new social movement, yielding a distributive impact on the markets, most notably through the GameStop saga, two researchers have revealed. ...Read more
Stock market
ASX tipped for record high despite inflation fears
The market is tipped to shake off fears of rising inflation, with the ASX 200 now tipped to close the year at a new record high, an economist has revealed. ...Read more
Stock market
‘Commission-free propaganda’: Warning issued for retail investors
The phrase “if you’re not paying for it, you’re the product” applies just as much to stock trading apps as it does to social media networks. ...Read more
Stock market
Is the tech sell-off creating opportunities for investors?
A tech sell-off sparked by inflation concerns has seen world markets crash. But is it creating an opportunity for investors to ‘buy the dip’? ...Read more
Stock market
Government opens arms to Wall Street
In its bid to maintain Australia’s global competitiveness, albeit its firmly shut borders, the Australian government has included a measure in its recent budget to allow foreign financial services p...Read more
Stock market
Aussie market falls on US inflation
The Australian sharemarket has fallen on the bell after Wall Street experienced sharp sell-offs overnight due to hotter than expected inflation data. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
