"The dizzying effect of trade wars: Washington is opening new battles on the trade front at a pace that is nearly impossible to digest. Here is what developed over the weekend:
India: The Trump administration has removed India from the developing nations list
China retorts: China published a 23-page white paper explaining its position on the recent trade rupture with the U.S. Not surprisingly, Beijing blames Washington for the recent rise in trade tensions. Meanwhile, the fallout from the tech and trade conflict continues as tech firms are starting to look at their supply chain risk
Mexico: It seems President Trump was mostly on his own in the decision to apply tariffs on Mexico over the border situation
Australia: Although the Trump administration has indicated it won’t take action, apparently the White House considered attaching tariffs on Australia due to a surge of imports of Australian aluminum
Kevin Hassett: The head of the Council of Economic Advisors is leaving, likely due to his opposition to the administration’s tariff policy
...We expect the administration will start to face more significant retaliation in the coming months that will affect the economy, both domestic and global, in ways that will be hard to predict. ...One trend that is likely to emerge is the creation of trade blocs, where local trade will be dominated by regional hegemons with little trade activity between blocs due to impediments. This would mean a world of higher inflation and lower profitability, but it will likely also be more equal and there will be less “creative destruction.”"
(Daily Comment dated 06/03/2019 by Bill O’Grady and Thomas Wash of Confluence Investment Management LLC)
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