Could the China Trade Spat adversely affect Gold & Silver Prices?


Welcome to illuminati silver, we tell you
the truth about silver. Today is Sunday 26th August 2018 and we are
very briefly covering the response by China against American Tariff’s and asking the
question Could the China Trade Spat adversely affect Gold & Silver Prices?
But first some background. President Trump has, as the basis of his economic policy,
promised the American people that he will address the balance of payments deficit, or
as is often described as the Trade Deficit. In 2017, the total U.S. trade deficit was
$566 billion. It imported $2.895 trillion worth of goods and services while exporting
$2.329 trillion. The deficit is higher than in 2013 when it was $478 billion. One reason
is because the dollar strengthened 28% between 2014 and 2016. A strong dollar makes imports
cheaper and exports more expensive. But the deficit is less than the record $762
billion seen in 2006. The decrease since then means U.S. exports grew faster than imports.
That’s good for U.S. businesses and job growth. President Trump wants to reduce these deficits
partially with protectionist measures. In March 2018, he announced he would impose a
25% tariff on steel imports and a 10% tariff on aluminium or aluminium.. On July 6, Trump’s
tariffs went into effect. China, the European Union, Mexico, and Canada have announced retaliatory
tariffs. Now we shall focus on China specifically here
because we believe it is the most notable in terms of global effect. Last Thursday,
the US imposed a second wave of tariffs on Chinese goods worth $16 bn and China responded
immediately in kind. The result is that both sides are now imposing 25% tariffs on a total
of $50bn worth of each other’s goods in other words a total of $100bn.
The US has since threatened a third round of tariffs on an additional $200bn of Chinese
goods which could happen as early as September. President Trump also stated, that if necessary,
he would place tariffs on $500bn worth of Chinese goods.
Our view put simply is that President Trump believes that as China exports more to the
US than the US exports to China, then China will be more adversely affected by such measures.
In an interview with Reuters Mr Liu Kun the Chinese Finance Minister said:
“China will keep hitting back at Washington as the US piles on more trade tariffs”
“China doesn’t wish to engage in a trade war, but we will resolutely respond to the unreasonable
measures taken by the United States,” “If the United States persists with these
measures, we will correspondingly take action to protect our interests.”
He also added that he was concerned about the potential job losses and lost livelihoods
brought about by the trade spat. To counter the impact on the economy, Beijing plans to
increase spending to support workers and help the unemployed back into work. It also expects
local governments to spend more than 1tn yuan (£114bn) on infrastructure programmes by
the end of the current quarter. As far as the short-term impact on the US
is concerned Economists generally agree that the tariffs will raise the costs of imported
steel, increase the price of U.S. automobiles, and create domestic layoffs. The tariffs have
depressed the stock market since they were announced, though they have begun to rebound
again but analysts worry that President Trump has started a trade war that will hurt international
trade. To us this is finely balanced. Should these
tariffs continue, and China’s economy is adversely affected, then we can very well
expect to see the value of the Yuan weaken further especially against the dollar meaning,
even higher tariffs will have to be levied to counter act this; alternatively perhaps
the pain inflicted so far may bring China to the negotiating table, though 2 days of
talks just completed have so far come to nothing. This is a complex economic trade area with
many factors affecting the outcome, which we shall discuss more within our Inner Sanctum
when it is launched. However, one consequence of a poorer China whether through trade or
currency devaluation will undoubtedly be a decline in its purchase of commodities, including
gold and silver which will have a dampening affect on its price – but we are not at
this stage yet. So, what are your thoughts on this policy
of tariffs – do you think it helps the US and World economy or damages them? and what
affect if any do you think they will have on gold and silver prices?
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Disclaimer: Illuminati Silver owners come from a background
of Banking, International Wealth Management and Economics. Having now retired from these
worlds we are not qualified to give investment advice. Therefore, this and other productions
must not be deemed to be giving such advice and merely represent the personal views of
its owners.

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