China is now in the impossible situation of trying to ease monetary policy while controlling the currency:
“When the PBOC still cuts the RRR when the yuan is facing depreciation pressure, can you imagine what kind of economic pressure China is facing?”
The Trump trade war is imploding China's economy, forcing the PBOC to ease monetary policy which they did over the weekend - creating a massive divergence with U.S. monetary policy. This in turn is putting tremendous downward pressure on the Chinese currency. Ironically, despite being labelled a "currency manipulator" by Trump, the Chinese are stepping in to SUPPORT their currency by drawing down their limited dollar reserves. In other words, Trump is "right" that they are manipulating their currency, just in the exact opposite way he believes. The net effect of all this buffoonish amateurism is driving the trade deficit with China WIDER:
US President Donald Trump's trade policy has backfired, as the country's trade deficit in goods with China in August jumped to a all-time high amid tumbling soybean exports and a halt in crude oil shipments to China.
Experts warned that if the US doesn't scale back the escalating trade war with China, the Trump administration would have more to lose, as US exports continue to dwindle due to retaliatory tariffs while the country's consumption-driven economy further expands imports, eventually taking a toll on the US economic outlook."
Trump isn't just driving the China-U.S. trade deficit wider, he has driven the overall U.S. trade deficit to 2008 lows. Because that's how we win now, by losing.
#Winning!!!
