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The trade war between China and the United States is in full swing and could lead to a new Fed rate cut

Recently, Donald Trump decided to increase trade duties on a group of goods totaling about $ 300 billion to 15%, which was previously assumed that it would be 10%. These duties will be effective from September 2019. Also, duties will be increased not by 25%, but by 30%, for a group of goods worth $ 250 billion from October 1. This was a response to China's imposition of $ 75 billion in fees, which will be in effect from September 1 to December 15. Beijing's move was also a response to Trump's previously imposed duties. In general, a chain reaction is started. At the same time, the parties continue to report that negotiations are ongoing and from time to time they signal a certain progress that for some reason no one is watching. However, the intensity of trade relations between China and the States is clearly visible, which leads to a slowdown in the global economy, as well as the economies of the States themselves and China. Naturally, not without another message on Twitter from Trump. According to the president of the United States, China should not have introduced new duties, but now, it has run into an increase in duties from the States.

In addition, Donald Trump once again "drove" under the head of the Fed, Jerome Powell, writing on Twitter that "he does not know who the worst enemy of America is, Xi Jingping or Jerome Powell." A hint, of course, on Powell's reluctance to take and lower the bet immediately by 100 points, as Trump wants. A little later a loud statement followed that China had stolen billions or even trillions of dollars of intellectual property from America for years and was going to continue this activity. Trump said that "it's time to put an end to this." The US president also appealed to American companies that have production facilities in China with an appeal to look for an alternative as soon as possible, and even better to return to America. The fact that the production of any product in America is more expensive than in China several times, and therefore the price of many products, now produced in China, will increase several times, if production is moved to the States, Trump does not care. End consumers will pay, and companies whose losses, naturally, will fall due to rising prices and reduced demand, will suffer losses, while Trump will receive new tax revenues. Or not Trump, but the new US president, whose elections will be held in 2020.

It is precisely the second term of Trump's presidency that now raises a huge number of questions. China openly expects Trump to lose the election. The longer the trade war with China lasts, the worse America's economy feels, the better ordinary citizens feel the recession, the less chance that Trump will be re-elected. Even if Trump is right and "China has profited from America for years," the electorate is primarily interested in its own welfare, prices in stores, and the lack of a deficit in the goods he needs. Under Trump, all Chinese products have risen in price, while American or European counterparts are much more expensive. If a trade war begins also with the European Union, then the Americans, who are big fans of the European automobile industry, will also experience the rise in prices for European cars. In this case, it is unlikely that Trump's fans will increase in the election. And, of course, all this will have a negative impact on the US dollar.

The material has been provided by InstaForex Company - www.instaforex.com