Tag: Coloma

Trade War Tempest or Just a Squall?  As the July 31st Fed interest rate cut was quickly overrun by the trade war tit-for-tat, we need to gain some perspective on expected impact of the US/China interaction in early August without the hype too often seen in the media.  On August 1st, Trump stated that he intends to place a 10% tariff on the remaining $300 billion-ish in Chinese exports to the US as of September 1st.  The prior statements were a 25% tariff (notably higher) and at an indeterminate date (easily ignored by the markets).  A lower tariff that can possibly be fully absorbed by Chinese firms may ruffle some feathers but would not be a crisis.  The Chinese response of cancelling nebulously-defined agricultural sales (note that pork shipments are full speed ahead, despite the existing Chinese tariff) would be partially matched off with lower US grain production from the poor spring weather.  There are also some reports that the Chinese tempered their Brazilian soy purchases which implied intrinsically lower Chinese grain demand.  In other words, this first response was justification for something they wanted to do anyway.