Loading ...If there is one thing that will halt this subsidized economic recovery and quickly send it into a tail spin is a trade war with China. What was Obama thinking when he signed a new tariff increase the tax on tire imports from China? Did his advisors not understand the can of warm that they were about to unleash?
China announced investigations into US imports two days after Obama increased the tariff of car tires. They have primarily targeted car parts made in the US. This may be a small but alarming action that could be forecasting the trade landscape of this recovery.
What if however instead of tariffs, the trade war spills over into the currency market? The damage that this would cause to the already frail US recovery would be so great that we could quickly see an economy is worst outlook than that of 1 year ago (during the credit collapse and Lehman BK). Just imagine, China announces that they will step up the efforts of diversifying from the US Dollar prior to letting their currency float.
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