Washington: ‘It is being said that the trade war with China will be beneficial for the United States economy. But in reality, the effects of the trade war will prove to be disastrous for the US. This trade war will increase the dollar supply but the demand will decline,’ claimed investor Peter Schiff, who is known for his accurate prediction about the economic crisis that rocked the United States in 2008. Therefore, the warning issued by Schiff is being taken seriously.
A country like China has been extracting huge profits from the trade with the United States while the the United States has only reaped losses as its share. The previous Presidents incurred this upon the United States by unduly pampering China. ‘But I will not make this mistake,’ warned President Trump while imposing taxes on Chinese goods. Following this, China retaliated by imposing taxes on the goods from the United States. Both the countries are looking at this as a trade war and have warned each other of dire consequences.
While the trade war between China and the US seems inevitable, some economists are claiming that this trade war will prove beneficial for the United States economy. This will reduce the Chinese financial influence and will stop the import of Chinese goods into the United States. The United States industry, and in turn, the workers will be benefited, is the logic behind the claim. Another argument is that, in case China retreats in this trade war, the Chinese markets will be more open to receive the products from the US. However, Schiff has criticised that these economists are not willing to consider that the trade war can be harmful for the United States’ economy.
Saying that the effects of the trade war will increase the supply of the US dollar but will reduce its demand, Schiff claimed that even the US Federal Reserve will not be able to avert the inevitable effects of this. Schiff has analysed that in such a scenario of increased supply and reduced demand for the US dollar, its value will reduce and even the US Federal Reserve will not be in a position to stop its downfall.