Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
SPX, NDX, INDU and RUT Stock Indices all at Resistance Levels - 16th Jan 18
Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver” - 16th Jan 18
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18
How to Know If This Stock Market Rally Will Continue for Two More Months? - 14th Jan 18
Everything SMIGGLE from Pencil Cases to Water Bottles, Pens and Springs! - 14th Jan 18
Land Rover Discovery Sport Very Bad MPG Fuel Economy! Real Owner's Review - 14th Jan 18
Gold Miners’ Status Updated - 13th Jan 18
Gold And Silver – Review of Annual, Qrtly, Monthly, Weekly Charts. Reality v Sentiment - 13th Jan 18
Gold GLD ETF Update.. Bear Market Reversal Watch - 13th Jan 18
Stock Market Leadership In 2018 To Come From Oil & Gas - 13th Jan 18
Stock Market Primed for a Reversal - 13th Jan 18
Live Trading Webinar: Discover 3 High-Confidence Trade Set-Ups - 13th Jan 18
Optimum Entry Point for Gold and Silver Stocks - 12th Jan 18
Stock Selloffs Great for Gold - 12th Jan 18
These 3 Facts Show Gold Is Set to Surge in 2018 - 12th Jan 18
How China is Locking Up Critical Resources in the US’s Own Backyard - 12th Jan 18
Stock futures are struggling. May reverse Today - 12th Jan 18
Three Surprising Places You See Cryptocurrency - 12th Jan 18
Semi Seconductor Stocks Canary Still Chirping, But He’s Gonna Croak in 2018 - 12th Jan 18
Land Rover Discovery Sport Panoramic Sunroof Questions Answered - 12th Jan 18
Information About Trading With Alpari And Its Advantages - 12th Jan 18
Stock Market Investing 2018 - “I Hope I’m Making a Bad Buy” - 11th Jan 18
S&P 500 Fluctuates As Stock Market May Be Topping, Or Not? - 11th Jan 18
SPECTRE Microprocessor Security Flaw - Big Brother = You - 11th Jan 18
7 Market Forecasts 2018 from the Brightest Financial Minds I Know - 11th Jan 18
It’s Not Enough to Be Contrarian - 11th Jan 18
Stocks That Take One for A Roller Coaster Ride Through the Thick And Thin Of Every Single Investment Made - 11th Jan 18
Police Arrest Tree Protester on Meersbrook Park Road, Sheffield - 10th Jan 18
Stock Market Aggressive Sell Signals - 10th Jan 18
The 2018 Decline in Precious Metals - 10th Jan 18
Gold Hits All-Time Highs Priced In Emerging Market Currencies - 10th Jan 18
TMV : 3X Leveraged Short on US Treasury Bonds - 10th Jan 18
Here are the Key Levels in Gold & Gold Miners - 10th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

Trump’s Trade Policies Are Provoking A Global Trade War— How to Hedge Your Portfolio

Politics / Global Economy Jul 14, 2017 - 12:17 PM GMT

By: John_Mauldin

Politics

BY PATRICK WATSON :Removing barriers to international trade has both upside and downside. Donald Trump is now president in part because he focused on the downside: lost US jobs, closed factories, blighted communities.

Even more important, he's fundamentally changing the way government looks at trade policy.

Trade negotiations have long had the implicit goal of promoting peace. It’s a fact that nations with active business relationships rarely attack each other, though the security aspect used to stay mostly unspoken.


Not anymore.

Trump has made it clear that he sees trade and defense as two sides of the same coin… and he’s explicitly demanding trade concessions in exchange for military protection.

Since the president has extensive power over trade policy, foreign governments will have to adapt—as will many within our own government.

We don’t yet know if his new approach will succeed. We do know that Trump intends to try it. For proof, just read his tweets.

Window to Thought

Many people wish Trump would stop tweeting already.

I disagree, not because I like his ideas but because I like having this window into his thoughts. It lets us see policy developing from the inside, and almost in real time.

The president often talks about both trade and defense—sometimes in the same tweet.

For example, here’s one from April, right after the Mar-a-Lago meeting with Chinese President Xi Jinping:

Here’s another one from May, when Trump had Germany on his mind, again killing two birds with one stone:

More recently, President Trump fired off these two tweets just seven minutes apart:

Of course, any president should promote US interests and deal with national-security threats. But misunderstandings in both policy areas can have extremely negative consequences—economic and otherwise.

We’d all best hope he does this right.

How to Capitalize—Or Hedge

Back in November, right after the election, I showed some of the ways national-security concerns had already set off a low-key trade war. With Trump’s trade policies, it’s not unlikely that it will break out into something bigger.

Here’s the strategy to capitalize on these trade trends.

Point 1: Even pre-Trump, broader forces were already slowing down—and in some ways reversing—globalization’s progress. This will continue no matter what Trump does.

Point 2: As we’ve seen after last week’s G-20 summit, President Trump’s linkage of trade and national security is clearly not playing well in foreign capitals. Any new US trade barriers will draw furious responses. That’s how trade wars begin.

Point 3: The US economy is better equipped to survive a trade war than many others. We have a large population, a diversified industry, and abundant energy supplies.

Point 4: US stocks are a different matter. Most large-cap companies heavily depend on export sales, imported raw materials, or both. A trade war will hit their bottom lines hard.

Point 5:  The companies most likely to prosper in a trade war are those with primarily US supply chains and customers.

I use “prosper” in a relative sense here. If we dive into a full-on trade war with governments slapping tariffs on each other, very few businesses will win. But some will have much better odds than others.

Subscribe to Connecting the Dots—and Get a Glimpse of the Future

We live in an era of rapid change… and only those who see and understand the shifting market, economic, and political trends can make wise investment decisions. Macroeconomic forecaster Patrick Watson spots the trends and spells what they mean every week in the free e-letter, Connecting the Dots. Subscribe now for his seasoned insight into the surprising forces driving global markets.

John Mauldin Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules