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"And if threats of a trade war with China or other countries turn into reality, this will tend to increase inflation, driving up prices both directly through ne
by MrEldritch 8y ago
"And if threats of a trade war with China or other countries turn into reality, this will tend to increase inflation, driving up prices both directly through new tariffs on imported goods and indirectly by encouraging less efficient production."
...I'm confused as to why either of those effects are supposed to be good things.
- craftyguy 8y agoThose aren't the 'good things' that trade wars are supposed to bring. Some people believe trade wars bolster local economies, by giving local manufacturers a price advantage for their goods.. thereby increasing demand for local products and "increasing jobs". I don't think it has ever worked out that way, despite all the rhetoric.
- simonh 8y agoQuite. Since those locally produced goods are more expensive (otherwise they’d have been locally produced already), everybody buying them now has less money to spend on anything else, reducing consumption and hitting the rest of the economy. Then you’re trapped, because if you try to unwind the damage, those jobs you did create go away again.