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President Trump followed through on his threats and hit China with a massive tariff increase. As you will see below, China immediately pledged to retaliate, and that will lead to economic collapse. U.S. and Chinese officials will continue to negotiate throughout the day on Friday, but if U.S. officials were optimistic that a deal was imminent the trigger never would have been pulled on these tariffs. At this point the gap between the negotiating positions of the two sides is still enormous, and that does not seem likely to change. The Chinese have been taking advantage of the United States for decades, and they wish to continue doing so. Meanwhile, President Trump and his advisers are absolutely determined to level the playing field. Unless one of the parties backs down in a major way, there is not going to be a trade agreement and this trade war is about to get very real, and that is extremely bad news for the US dollar and for the global economy.
A full-blown trade war with China could lead to global economic collapse and dollar collapse. If Trump understood how bad things could potentially get, he probably never would have gone down this road, because it is going to be exceedingly difficult to get re-elected if the economy tanks.
I think that a little review of what happened during our last trade war will help us get a little perspective on what could be ahead. On June 17th, 1930 President Hoover signed the Smoot-Hawley Act which imposed tariffs on more than 20,000 imported goods.
This coincided with the worst economic dcollapse of the 20th century. U.S. GDP declined 8.5 percent in 1930, 6.4 percent in 1931 and 12.9 percent in 1932.
On June 12th, 1934 President Roosevelt signed the Reciprocal Tariff Act which essentially ended the trade war. So what happened?
The U.S. economy grew 10.8 percent in 1934, 8.9 percent in 1935 and 12.9 percent in 1936.
Today, the global economy is far more interconnected than it was in the 1930s, and so the impact of a global trade war could potentially be a much greater economic collapse and stock market crash.
Script written by Michael Snyder, author of theeconomiccollapseblog.com
Music: CO.AG Music https://www.youtube.com/channel/UCcavSftXHgxLBWwLDm_bNvA
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