4 ms·
Less trade due to tariffs lowers the incentive for China to a) roll over the bonds and b) buy new ones. This will hit the US federal budget and in turn be notic
by zmk_ 8y ago
Less trade due to tariffs lowers the incentive for China to a) roll over the bonds and b) buy new ones. This will hit the US federal budget and in turn be noticable for everyone.
- gonvaled 8y agoThat is how you reduce the deficit: americans consume a lot, so the US borrows, and the deficit is high. Put another way: one way, the easiest for the US, to reduce the deficit is to reduce consumption. This will happen more or less automatically with increased prices. Another way is for the dollar to tank, which will also reduce consumption and increase exports. The ideal situation (for Trump I assume) is to keep a strong dollar, increase exports, keep consumtion high and get the financing the US wants. It is difficult to see how this can be achieved, or whether this is fair for 95% of the planet's population, most of which are poorer and work as hard or harder than americans.