1. By www.ProfitableInvestingTips.com

2. What is going to happen with US
Chinese tariffs?

3. The consensus of the stock market
seems to be that an amicable
agreement will be reached and all will
be well.

4. That may not be the case. What
happens to your investments if the
trade war becomes permanent?

5. We are not the only ones to be
concerned.

6. CNBC reports that Moody’s believes
the stock market is getting it
wrong and that the trade war could
be prolonged and cause lasting
damage to the world economy.

7. So far the USA has put tariffs on $200
Billion in Chinese goods and the
Chinese have put tariffs on $60 Billion
in US goods.

8. “It’s a very modest response,” said
Edward Alden, a senior fellow at
the Council on Foreign Relations, of
China’s reaction.

9. “There’s no question China’s hurting
and they may want to negotiate.

10. The problem is the Trump
administration may be overplaying
its hand.

11. The harder they push, they may push
the Chinese into a corner where
politically and for just reasons of
saving face, they can’t negotiate with
the administration, and secondly the
administration hasn’t established a
negotiating process.

12. There’s a real divide between the
trade hawks and doves.”

13. Moody’s is predicting that US
growth will slow to 2.3% next year
and China’s to 6.4%.

14. Why is this happening and why is there
a danger of a prolonged trade war and
diminution of the global economy?

15. The Rise and Predictable
Slow Decline of US Economic
Power

16. The USA became the dominant
global power at the end of World
War II.

17. War had ravaged Europe and Asia. In
the years after the war Japan and
Germany rose from the ashes of defeat
to become major manufacturing and
global powers.

18. India became a country instead of a
British colony.

19. Brazil started seriously developing its
industry.

20. The USSR rose and fell to be
followed by the rise of the Russian
Federation as a dominant producer
of raw materials, especially oil and
natural gas.

21. As Europe, Asia, and other parts of the
world gained economic ground they cut
into the dominance of American
industry and even science.

22. This would have been easy to
predict given that another global
war did not occur.

23. Nevertheless, many in the USA long for
the “good old days” of American
dominance.

24. Those days occurred because WWII
destroyed so much of the global
economy and left the US economy
intact.

25. Nevertheless, many Americans are
really angry and thus elected Donald
Trump.

26. Trump is under pressure to “get a
better deal” for his constituents
and is not known for backing off.

27. And, even when Trump is no longer in
office, US leaders will need to address
the trade imbalance with China in order
to preserve a strong US economy,
manufacturing base, and defense.

28. The Rise of China

29. China was the “middle kingdom” in
Eastern Asia for centuries.

30. Then the European Colonial powers
ringed them in.

31. When the Communists defeated the
Nationalists in the late 1940’s they
became an enemy of the USA.

32. And, the USA developed alliances that
ringed in both the USSR and China.

33. China was an isolated nation with a
huge army and nuclear missiles.

34. In the 1970’s US President Nixon
decided that bringing China into
the community of nations was a
better idea than leaving them as a
dangerous outsider.

35. The Nixon visit to China led to opening
up of the world to Chinese
manufacturing and a huge amount of
investment in China.

36. The result has been that China is
the largest exporter in the world
and has a trillion dollar foreign
currency reserve.

37. AND, the Chinese have a trade surplus
with the USA in the hundreds of billions
of dollars each and every year.

38. China does not want to go back to
its period of isolation and has
global ambitions as seen in its Silk
Road project to create rail and sea
links to markets across Eurasia.

39. China needs to sell it products to the
world in order to further its global
ambitions.

40. There will be a level of tariffs and
loss of markets that China will not
be able to agree to in their
leadership wants to maintain
control of the country.

41. Meanwhile wealth Chinese are causing
a flight of capital from the new Middle
Kingdom.

42. Automation and
Outsourcing

43. Throughout the world
manufacturers are using more and
more automation.

44. Robots may cost more than people but
they don’t get sick, don’t need
pensions, and can be “retrained” with a
few lines of computer code.

45. The result has been fewer jobs in
many industries.

46. Then, companies in developed
economies like Europe, North America,
and even Japan outsourced their
“easier” work to countries like China to
get the work done for less.

47. And, by outsourcing they bypassed
labor issues and did not need to
buy health insurance or pay
pensions for those foreign workers.

48. The net results was fewer jobs in the
American Industrial Heartland and in
similar areas in Japan and Europe.

49. Fewer Jobs, Lower Pay, and
Angry People

50. You do not need to be a university-
trained economist to drive through
Gary, Indiana and notice that all the
steel mills are gone.

51. This picture has been duplicated across
American and Europe as well.

52. There certainly are good jobs in
new industries but many of the
good new jobs require a college or
university education.

53. And then there are all of those
foreigners who can write computer
code as well as a home-grown
American.

54. And they are willing to work for
less!

55. People are making less money and for
the first time in American history do
not believe that the country is getting
better or that their lives will get better.

56. So, What Happens to Your
Investments if the Trade
War Becomes Permanent?

57. Both the USA and China see the
trade war as “zero sum” game.

58. A zero sum game is a situation in
which the losses by one side are the
gains of another and vice versa.

59. China sees is place in the world as
the dominant global economic and
political power, which are positions
now held by the USA.

60. The USA sees itself as maintaining its
place in the world and is justifiably
fearful of a world controlled by China.

61. There may be a point at which
neither side will back off of its
demands.

62. When that happens, trade between the
USA and China will diminish.

63. There is a chance that trade
between China and Europe could
also suffer is Europe adopts the
view of the USA.

64. This would result in different global
trade patterns and diminished global
trade.

65. How are your investments going to
do if Caterpillar, Boeing, 3M,
Microsoft, Apple, Harley Davidson,
and other US companies lose
foreign sales?

66. Can the USA bring industry back to
the Industrial Heartland?

67. What will happen to the USA dollar if
the global economy shrinks?

68. Right now, investors are pulling
money out of developing economy
and into dollars.

69. Forex traders are waiting for that trend
to reverse.

70. Domestic businesses like utilities,
railroads, and others whose
businesses are limited to the USA
may be a hedge against a
permanent trade war.