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Ghost of a trade war roams the market

May 15, 2020

May 15, 2020

Trade war: to be or not to be?Dmitri Demidenko

Donald Trump provokes China but China is different now

When I look at some people there’s only one thing I can think about: how do I get an arms licence? A renewal of the US-China trade war is the last thing the global economy needs now when the pandemic is here. Still, Trump won’t calm down and continues blowing the whistle on Beijing. One day he threatens to introduce import taxes in reaction to the alleged origin of coronavirus from a laboratory and failure to fulfil the obligations to buy American products. Another day, he forbids the US largest federal pension fund to invest in Chinese shares. Another say, he speaks aloud of a total breakup with China, which will allow the States to save $500 billion. Can’t Trump just put his mask on and keep his mouth shut?

![LiteForex: Ghost of a trade war roams the market][1]

China understands the benefits of being the first country that has made coronavirus kneel down. It’s not the same country it was at the beginning of 2020.  China has made everyone understand no one can twist it around their little finger. Otherwise they will be given the finger. And if the Americans want to tell the Chinese to go to hell, they will have to see them off until the final destination. Beijing swaps diplomacy for threats more and more often. It stops buying Australian pork in response to Canberra’s intention to start a global investigation into the origins of coronavirus; it blows up rumours of the US plot against China; it encourages the states that are loyal to China.  ​

Beijing has started to think again it can outrun the West like it did after the crisis of 2007-2009 when the growth of Chinese GDP helped global economy to recover.

As for Trump, Beijing’s chosen the same tactics as Fed chair Jerome Powell did. It pays no attention to US president’s angry talks. All know that ignoring is the oldest method of emotional violence. These 2 countries’ relationship looks more and more often like a family idyll when a husband pretends to be the head of family and makes orders while a wife agrees with him and still does things her way.

![LiteForex: Ghost of a trade war roams the market][2]

Trump’s talks of a total breakup with China look like a man’s desire to divorce:

- Why did you divorce?

- My wife and I didn’t have any common interests except 9 children…

The US-China relations are too tight to be easily broken up. It’s almost impossible to remove Chinese businesses from supply chains which involve the USA. Globalisation rules the world. The US stock indexes’ rally says there won’t be any trade wars. How does [S&P 500][3] know everything? People’s wisdom…Still, people aren’t always wise. Sometimes they aren’t sober.

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Price chart of SPX in real time mode

![Trade war: to be or not to be?][6]

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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