How The US-China Trade War Turned Into A Currency War

How The US-China Trade War Turned Into A Currency War


The trade war took a dangerous turn and
is now morphing into what many are calling a currency war. It’s all out economic warfare between
the two biggest economies in the world. U.S. and China. Two key developments took us here. The Chinese currency weakened passed
a significant level that investors were thinking maybe China would
defend—an indication perhaps that China was stepping up its fight
in the trade war. The U.S., in response, designated China a
currency manipulator, something that the U.S. Treasury hasn’t done since 1994. And while mostly symbolic, was seen as
a big aggressive move to call China out and just escalate this
trade tension even farther. What makes it difficult is that when
you have a currency war, everybody wants a weaker currency. Weaker currencies help your exports stay
more competitive on a world stage. But not everybody can
have a weaker currency. So in response to the U.S. and China’s moves on currencies, we
saw other central banks and economies take action like India, Thailand and
New Zealand, all surprising their markets through monetary policy and
all weakening their currencies. If everybody races to the bottom, it
can be very disruptive to markets and to the global economy. When the Treasury formally calls out
another country for being a currency manipulator. Not much happens. It’s largely symbolic. It’s a badge of dishonor. It’s considered embarrassing and puts that other
country at the top of the G-20 agenda for discussing what
it’s doing with its currency. In practice, not
much explicitly happens. The Treasury engages the International
Monetary Fund and China in negotiations and discussions about what
the currency has actually been doing and how they’re
going to fix it. However, this administration doesn’t necessarily
play by the same rulebook. So many are worried that by
designating China officially a currency manipulator, President Trump could use that
politically and on the world stage to just impose more tariffs,
other sanctions and other economic punishments. Now, that’s not necessarily in
the Treasury rulebook for how this goes. But we’ve seen President
Trump break the rules. Mostly everybody wants
a weaker currency. There are benefits to having
your currency be weak. Number one, it makes
your exports more competitive. If you’re Japan and selling Hondas and
Toyotas to Americans, it gives them an edge over companies
like GM and Ford. It also makes
earnings more competitive. S&P 500 earnings have gotten hit this
year because the dollar’s been so strong. Anybody that does business overseas, from
Apple to Procter and Gamble to the automakers to John Deere, which
President Trump also called out during a tweet, their earnings and their revenues
get cut by that strength of the dollar. They sell overseas. It’s less competitive. They bring the money back home. It’s worth less. We’ve learned this lesson
so many times. And that is currency wars and
tensions fueled by countries trying to weaken their currencies can have a
very destabilizing effect on growth and on stock markets. It happened in 2015. China made a surprise decision to let
its currency weak and devalue the yuan. Guess what? That led the S&P 500 into a
correction, 10 percent off the highs. That’s why as soon as we saw
China let its currency weakened, it sparked all sorts of concerns, not just about
the escalation of the trade fight, but about what’s really happening
beneath the surface in China. When countries devalue their currencies, it
leads investors to wonder, is their economy suffering
worse than expected? Are they going to have to deal
with capital flight, a scary prospect where people take money out
of their economy. We’re not talking about in a small
emerging market like Turkey, where we had these concerns. We’re talking about China, one of the
biggest markets in the world and the second biggest economy in the world. When you have other countries stepping in,
then to fight to protect their economies and their currencies, it’s this notion
of a race to the bottom on interest rates and on currencies. And that is what spooked markets. The fact that it’s going to be unpredictable,
it’s going to be a source of tension and ultimately it’s going to
kill growth because tensions put up walls between countries. Trade slows down. Tensions emerge. And that’s sort of been the theme of
what we’ve been seeing on trade and now currencies in 20 19.

Author:

100 thoughts on “How The US-China Trade War Turned Into A Currency War”

  • The Yuan exchange rate dropped because of currency trading due to the effects of the trade war. No one in the world including the WTO has said that this is currency manipulation. Trump and his administration will do anything to win a fight. He is a like a school yard bully calling another kid a dirty name. Check out other channels.

  • Christoffer Allan Zacarias says:

    Dear World,

    We apologize for America's in sourcing/Made in the USA plan. America's energy independence plan is also affecting Canada's energy industry. We'll try talking to the Americans.

    Sincerely,

    Canada 🇨🇦

  • We just need to go back to a gold or silver standard. That way they can’t manipulate currency as badly as they do. End fiat currency!

  • Wonderful news and informative news about China no2or1 patient without fighting for number 1spor the come to an ending lesson for China 🇨🇳 America still not ready to see China 🇨🇳 winning

  • Avneesh Singh Tomar says:

    Biggest currency manipulator is USA for what it did in 1971. Now DOLLAR is based on THIN AIR along with economies of various other countries depending on USD.

  • Trade doesn't matter what matters is demand for what ever good you are selling if it's to expensive they will go somewhere else what really needs to happen is Americans buying American again

  • A country devalues its currency by "printing" more money, but currency devaluation happens because of demand and supply imbalance. If a country keeps printing new money but investors keep buying it, there will be technically no currency devaluation. You take a look at the USA, they were "printing" money like crazy through QE1 QE2 QE3, but nothing much happens to the USD. The currency still held strong their value today and investors all around the world still have great trust in their value.

  • Guardian of Fire says:

    It was internationally trade that caused payment for work to plummet in the first place all around the world. Then requiring people to import cheaper goods from somewhere else to counter the low wages and higher cost of living. Its a cycle that will only last as long as there are cheap labor abroad. Eventually business will either automate or get the govts to destroy a nation back to developing status for it cheap labor addiction to maximize profits.

  • The reason why nations devalue their currency is because THEY KNOW a recession is coming…act fast or face worse consequences… interesting enough when china devalued their currency 2008 recession came so citizens of United States prepare for same 2008 shock 😀 im glad I wasnt born in the US must be the worst time this time around…with products getting more and more expensive day by day….

  • 😎😎😎Still Winning #Walk Away take the Red Pill and Open your Eyes every one 😎😎😎# K.A.G.2Q2Q TRUMP 😎😎😎

  • China is a slave labour State where the 1% [top communist party members and relatives] have hidden black money in foreign luxury real estate all over the world as a hedge against economic collapse. A weakened yuan only impacts the slaves. Just as for U.S. billionaires, a weakened dollar still leaves them billionaires.

  • Highlight Realty Network says:

    I glad china is getting hit because their business s steal from us I designed the drone and they made 4.7 billion and i dont get a dime

  • Made a dance song saying Trump BEATS CHINA ALL THE TIME. Give it a listen LOL
    https://www.youtube.com/watch?v=PzOAKpVySg0

    Reply

  • what do you mean when you say China let it's currency to fall? Does that mean that China needs to put more money into its currency so make it stronger? So by letting the market drop their currency, then they are the "Currency manipulator"?

  • Valentine Gift says:

    China always been doing this, and other Asian countries as well. Since they have sound growth, it was obviously helpful.

  • Americans should know that the Chinese Communist Party is the largest oligarchy in the world and that to bring back American unions and raise American wages, we will need to also empower Chinese working and middle class people.

    This will come against the wishes of the Chinese Communist Party that controls the Chinese economy, control wages in China, control their value of currency, and control the Chinese business environment for the purpose of empowering a Communist agenda in Asia.

    The Communist Party in China is also their 1%.

    An American president will need to challenge the Chinese Communist Party while empowering the working and middle class people of China. Tariffs won't do that but something needs to be done in making this happen. When wages of both nations reach parity only then will American labor rebound.

    Ideas, anyone???

  • CHINA DID NOT DESTROY AMERICA…WHAT HAS DESTROYED AMERICAN IS UNNECESSARY ENDLESS WARS OF AGGRESSION ABROAD AND CORRUPTION IN WASHINGTON, DONALD TRUMP LIKE MANY OTHER LEADERS ARE SCAPEGOATING CHINA AND MIGRANTS TO APPEASE THE VULNERABLE WHITES THAT THEY HAVE DUPED FOR YEARS

  • Prairie Bilton says:

    A currency war is what we need! if you dont agree its because you dont know whats good for you….. Crack addicts dont think they have a problem either.

  • USA is led by dictator…and going down in couple of decades…wealth and power corrupt the people…karma is also coming….get ready for the consequences.

  • You know that if the US had a weaker currency, then that means the the people at home can't purchase as much. That's bad!

  • Trumps Unemployed Voters Care About:

    Alt Right Nationalism
    Freedom of Speech
    Boys Club
    Antifia
    Israel Rights not America
    Jesus Kanye West
    BLM

    Yet they don’t care about China & Ai Automation Taking Over

  • China has no comparison to the United States. First of all in the United States you can own a business owned property and freely invest. China rent home from the government, never allowed to own property, cannot use bus cannot use airplane cannot have friends with low credit score. How is China anything like the United States????????

  • Change the president of America . This suitation will resolved. This suitation never happened during' Obama' tenure .

  • People already know long time ago, I can tell what US will do next: now, they are using hk card… next yr Taiwan which is China's core interest. Ask US not to play with fire.

  • An inverted yield curve is caused by a loss of investment confidence, distorting the statistics. A loss of long- term investment confidence has the power to generate a recession; it can also create a bull-run in gold. Similarly, it creates preppers, who might collect together a pantry not dependent upon power; or people who withdraw their funds from banks, or people who build an underground shelter. Threats and counter- threats in political powers shows that financial instability begins as government policy. All these people are showing an educated response to try to protect themselves and their assets; and they are the BRIGHT ones. There are also some who have searched in God's word for the solution, and they FOUND it.
    The financial storm brewing in the EU results in the collapse of the Euro. Ezekiel 7: 19 Revelation 18: 17 Psalms 46: 4-6. We approach the time of worldwide 'wrath' Revelation 11: 18: "The nations became wrathful, and Your [God's] own wrath came; and the time came to…..bring to ruin those ruining the earth." Israel will declare: "Peace and security!" 1Thessalonians 5: 2, 3 and Iran will BOMB them; Daniel 11: 44, 45 due to their great anger when their nuclear assets were destroyed by pilots. This 'sudden destruction' has worldwide implications, and the US joins the war against Iran immediately. Daniel 8: 20, 23-25.

    My purpose is to inform as many people as possible how to survive the Great tribulation. Psalms 68: 11: "Jehovah Himself gives the saying: The women telling the good news are a large army." This begins with the truth found in God's word. John 17: 17. The survivors are already found in God's Kingdom at the outbreak of distress, when Christ arrives. Matthew 25: 31, 34. This is why they are protected and healed during the Great tribulation. Matthew 24: 14, 21, 22. They can therefore be described as survivors with confidence. Revelation 7: 9, 14- 17 The 'tribulation' found in Matthew 24: 29, 30 is also the arrival of Christ 'in power and great glory'. This is also the 'sudden destruction', when "Peace and security!" is declared in Israel, 1Thessalonians 5: 2, 3 as the False prophecy of the False prophet Revelation 19: 20; and Iran BOMBS them Daniel 11: 44, 45 introducing Jehovah's Day of anger with battle and distress appearing in Gaza, Ashdod, Ashkelon and Ekron Zephaniah 2: 1-11 while Christ told us to 'get out of Judea' at this time Mark 13: 16 because it is a time of missiles war. 2Peter 3: 10. During the 'hissing', 'roaring' missiles, Christ arrives in power earth-wide, because the political system has been thrown out of power by Jehovah. Satan, [Gog of Magog Rev 20: 1-10] came upon the 'soil of Israel', Ezekiel 38: 18, 19 and Jehovah responded by changing the worldwide government. That is why the survivors are found to be already in God's Kingdom when Christ arrives; as seen in Matthew 25: 31, 34.
    The Great tribulation has broken out; and along with the war between the US, allies and Iran there is also a war between Russia and the financially collapsed EU Ezekiel 7: 19-22. In addition, the original destruction of Iran's nuclear assets by pilots refuelling in Saudi Arabia sets all 23 Arab states into conflict and bloodshed having a Sunni-vs-Shea character. Jeremiah 25: 24-26, and this results in large scale arson in the oil and petrol refinery industry. Psalms 37: 20. So we see a time of financial meltdown Psalms 46: 4-6 is also a time of fuel destruction, that leaves transport and industry stranded.
    The Great tribulation is a five month crisis that is cut off by Jehovah when the wicked are all destroyed Psalms 92: 7 Psalms 37: 8-10. This five months conforms to the flood of Noah Matthew 24: 37 that is seen in Genesis 7: 24 as a 150 day event when the flood went over the tops of all mountains. This conforms to the five months of distress found in prophecy in Revelation 9: 5, 10.
    This planet is to be cleansed and redeveloped and re-established until it resembles a Paradise Luke 23: 43. Even the dead of former times are coming back, as actual accounts and prophecy shows. Acts 24: 15 Revelation 20: 13 Mark 5: 42.
    All this detailed history is written in advance to create FAITH based on information and understanding Romans 10: 13-15 because Jehovah is bringing in the biggest rescue of faithful mankind John 3: 16 ever in history; due to the worst man-made cataclysm in all human history. So the written prophecy 2Peter 1: 20, 21 is to greatly increase the numbers of those being saved.
    The time of man's rule over man is over Romans 9: 28 with these events; and the political system will be EXECUTED Revelation 19: 11, 19-21 for causing the deaths of billions, while breaking the system down into chaos.
    The time of Christ's Rule Revelation 11: 15, 18 Matthew 24: 29, 30 and also His heavenly brothers Revelation 5: 10 BEGINS earth-wide; and when the wicked are destroyed; Psalms 92: 7 the Great tribulation is OVER.
    There is now a 'new heavens', ruling over a 'new earth' Revelation 21: 1 and YOU ALSO CAN LIVE THROUGH THIS TIME AND THEN EXPERIENCE EVERLASTING LIFE IN PARADISE.John 17: 3, Luke 23: 43; John 3: 16 Psalms 37: 11, 29.

  • The first loser in the currency war is the EU. The Euro collapses, and this causes a famine in the EU, and war appears between the EU and Russia. Ezekiel 7:19-22. This is the time when Christendom is pillaged for valuable artefacts to support the Russian rouble, at a time of worldwide financial meltdown Psalms 46: 4-6.

  • You are innocent , American pretend shouting others manipulate devalue thier currency, Truly the American very favor US dollars high value. Because it's printing dollar in exchange others real tangible goods. While it keep on trying by every means in anyway to keep dollar the global currency. That's why US collude with UK in Brexit trying to destabilize or destroy EU money as it's challenge the dollar.

    BUT situation now US FED are printing huge amount of dollar inject into market via government hiding sovereign funds and big government behind conglomerates businesses. The dollar they keep on printing are HUGE much much more than BUSH & OBAMA printed out during "Too big Too fail" crisis. And we all real economists know well this is The worst doing on free market mechanical that all Economicss withhold.

  • It’s Time to stop trade with China there will never be fair trade with China, China has been cheating for 30 years and they have no plan of changing.

  • i dont give a DAMN about stocks and profits and alll that garbage that masss media always spew. it is all about values. morals and doing the RIGHT thing. MAGA 4 life!!!!

  • The trade war is not morphing into a currency war. That assumes the trade war came first. Quite the opposite is true. Countries going off the gold standard in the 1930's triggered a currency war, which inevitably leads to trade wars.

  • nicole piscatella says:

    The last time I checked we owed China a Trillion Dollars… When Obama was in office along with other Presidents…..I'm confused. Can someone help me please, I don't like feeling lost….ughhh. The U.S. has tariffs on China (but we owe them). Now China is retaliating against us….SMH. Can someone please school me and point me in the right direction…This is BS…ugh

  • americans are dumb people, they are also uneducated and it's very easy for US government or the deep state to control them, but now USA is in very bad situation, they have enormous debt, the US economy is going in recession, the people are divided,  they have clown-lunatic for president, so what US needs is to find some imaginary enemy to unite the people. Russia is already too well-known and it has weapons which can destroy USA so it's dangerous to play with it, and here it comes China, China is the new "enemy", it's the modern USSR, and as everyone can see the government officially considers China as enemy N1, it started trade war, soon maybe and cold war, but however all americans should unite against China, at least that's the plan of US deep state, but unfortunately they have problems to do it, especially outside USA.
    so i expect next year after the elections, there'll be a huge problem with US economy, it may even collapse and there'll be riots as in Hong Kong or maybe a civil war in USA.

  • changgyu chung says:

    Japan is doing the exact same thing as the US to China. The purpose is to stifle technology development of South Korea, because Japan feels threatened.

  • After so many rounds of tariffs, China would be manipulating their currency if the Yuan does not fall. You just cannot wish to hit them hard and expect them doing great.

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