Donald Trump has started a full-blown trade war with his tariffs on both allies and others. He claims that “a trade war is easy to win”, but nothing could be further from the truth, and frankly Trump’s simplistic view is tiresome and dangerous. I have a good grasp of what the short-term effects of this trade war are likely to have here in the U.S., but beyond that, my understanding of macro-economics is sketchy. Fellow blogger Erik Hare, on the other hand, is an economist and therefore understands far better than I what is likely to happen on the global scene. Please take a few minutes to read Erik’s assessment of the current situation. Thank you, Erik, for your keen insight and for allowing me to share this post.
The trade war is definitely on, no matter how Wall Street wants to deny it. Serious investors have downplayed recent events as part of a grand strategy, a negotiating tool that will all work out in the end. The reality, that there isn’t really a good strategy in place here but simply petty tactics, has not sunk in yet, at least in America. But the rest of the world knows better.
For the purposes of this discussion, the European Union will be diminished to Germany. After all, this is the economic engine that powers the continent right now, and Merkel’s leadership is critical. Where is Germany going? The long and short of it, the strategic and the tactical, is to the east. This response is proof enough that there is no US strategy which makes any sense.
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