Australian dollar smacked as Trump readies $200bn tariffs for China

Via Bloomie:

President Donald Trump is preparing to release a list of an additional $200 billion in Chinese products to be hit with tariffs, according to two people familiar with the matter.

The list could be released as soon as Tuesday, and likely this week, according to the people, who spoke on condition of anonymity because the matter isn’t public. The publication of the list starts a weeks-long process that includes a public-comment period and hearings.

AUD smackdown:

Comments

  1. The USD sold off about 1.5% in the past fortnight and that triggered a rally in the AUD and as the Aussie sentiment was bad and market positioning was short, it triggered a squeeze with short term traders and those short at bad levels on margin to cover their exposures. I don’t think the fundamental outlook has changed and this bounce is an opportunity to sell into…

  2. $0.7485 becoming clear resistance for the bulls now on the shorter timeframe

    Bears still eyeing $0.7380 below which there is not much by way of support

  3. GunnamattaMEMBER

    I must confess i have reached the point where i want the Trade War.

    I want the economic pain.
    I want the reset.

    I am sick of having the prospect of economic pain of some sort being used as an excuse to protect some vested interest from reform……. (be it China or the US or the EU or Japan or anyone gaming global trade, be it electricity producers gas producers, banks, retailers, real estate agents, Gottiboff gouging the shit out of punters domrstically, be it Federal State and Local governments gaming services, the population ponzi and infrastructure education and healthcare)

    If it requires that much bullshit to keep the status quo in place, then let it fail, learn from the pain, and build something better from the wreckage.

    If Trumps Tariffs take us to that reset then so be it

    • I feel you.
      Unfortunately every time I’ve wanted something with shadenfreude sprinkles, it’s come into fruition and far worse than I wanted. But there’s a lot that’s broken right now and things are blissfully ignorant for enough people to warrant a shock to straighten things out for a little while again.

    • This bloke is a regular China commentator but he ends up talking silly in this article

      https://asia.nikkei.com/Opinion/Xi-risks-losing-face-in-a-trade-war-with-Trump

      “But the costs of the concessions needed to stabilize Sino-American relations go beyond the amount of extra goods China pledges to import from the U.S. or even the perceived loss of face for Xi. Ultimately, China will not only have to give up its state-capitalist model, the root cause of Sino-American trade tensions, but also curtail its geopolitical ambitions and put on hold its challenge to American preeminence.”

      Given that option or taking the fight up to the Americans I suspect Mr Xi will choose the latter. One thing in its favour is that it is not picking fights all around the world. But yeah, gunna, lots and lots of economic pain.

  4. The Chinese dont have a lot to gain from getting shouty with Trump.

    As they are running a deficit they cant win the argument. The best thing they can do is to reduce their surplus with the US as fast as possible as a well armed cranky hegemon debtor can be a major pain in the butt.

    They should be grateful the US was dumb enough to give them as much access as they did over the last 20 years. By and large they have gotten most of the important stuff and the rest of the world will sell them the rest.

    Make nice with Trump and extricate themselves from a lopsided relationship asap.

    I suspect that the US is cranky mainly because they know the China horse has bolted and they hoping they can force a mistake by China. By mistake I mean getting into a “face saving” food fight.

    What is Trump going to do if China says

    “Yep you are right Donald, we are going to block exports of XYZ (start with the junk they dont care about) to the USA to immediately reduce the trade deficit by 10% and will continue to do so until it is completely eradicated. To speed up the equalisation process we will increase imports from the USA and cut them from Australia and a few other of your buddies”

    The USA trade balance with China will be exactly what he is demanding …..on a fast track to balance.

    Is Trump going to say no to increased imports to China and reduced exports from China to the USA?

    Nope……even if little Malcolm Downunder starts blubbing.

    The only sticking point is if the “face saving” obsessed crowd in Beijing are too dopey to explain the strategy to the general population.

    China can still run a mercantalists strategy with everyone else stupid enough to let them……like Australia.

    Just not with the USA.

    • in a nutshell:
      The Chinese dont have a lot to gain from getting shouty with Trump. As they are running a (HUGE) deficit they cant win the argument

      • Yes – but the problem for Australia is that if China concedes that it cannot win the trade slapfest with Trump the outcome for Australia is not good.

        If China diverts a chunk of its imports from Australia to the USA – it is ouch downunder.

        Even if China does not divert imports from Australia to the USA its demand for our exports is likely to fall as it will no longer require the input commodities required by whatever it stops shipping to the USA. There is no guarantee that if China stops shipping low cost junk to the USA that it will be replaced in the US market by US made goods (or imports from somewhere else) that need our commodity inputs. Demand for that stuff might just fall. So there is no guarantee that Australia will pick up exports to somewhere else if part of the Chinese export to USA industry declines.

        In both scenarios it is ouch downunder.

        Naturally the Chinese might try to boost internal demand to replace the decline in exports to the USA but is that production likely to be commodity intensive?

        Nope.

        No wonder funding costs for our magnificent Aussie house price bubble are rising.

        Just as well we have our beaches, population ponzi and are getting good at making single bean espresso.

      • 07
        Straya is just a bug on the windscreen, about to see its ares morph into its face
        27 years of complacency
        much spilled latte to come here
        what did you think a banana republic meant?

      • WW,

        “.. what did you think a banana republic meant?..”

        Causal men’s fashion involving lots of pastel?

    • I feel that even Trump really wants that and if China turned around and did exactly that, they would be a tweet shout out saying “the chinese.. great people. We are working with them, the support america. Just lovely. Lovely”.
      China is too far gone too far down without a fight. This would be hard for them to navigate.. see what they did with the EU.

    • Ronin8317MEMBER

      To bypass the tariff, the goods will just reach USA through Vietnam? Or maybe Taiwan? Shipping it through Israel can also work, since the US will never in a million year put tariff on anything from Israel.

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