Wall Street has used the "trade war" panic to reprice assets in an accelerating economy facing Federal Reserve announcements of "gradual" interest rate increases and the U.S. Treasury's soaring deficit financing needs.
A huge buildup of cash positions over the last few months had to be used to acquire the frothy assets at a "right" price. A process euphemistically known as a "market correction" will continue, using trade and other media-hyped issues as proximate causes for further risk-adjusted valuations driven by changing economic fundamentals.
America's $640.8 billion problem with the European Union (mainly Germany) and East Asia (mainly China) should be an easy win.
That scandalously large and intolerable trade deficit in 2017 is now running at an annual rate of $630.6 billion, based on numbers for the first two months of this year. Over that period, U.S. exports to the EU increased 8.8 percent, but exports to China declined — there was virtually no improvement for American sales to East Asia as a whole.
Reasons behind the U.S. administration suddenly waking up to its trillion dollar foreign debts are irrelevant to the ongoing trade argument. But that can underscore the urgency of stopping America's huge losses of wealth and intellectual property in a system that violates the long-established rules of orderly and balanced world trade.
It is important to do that because the Europeans and East Asians are pushing back by raising the decibels of "trade war" histrionics with improper accusations that America is destroying the world trading system.
Reference: CNBC
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