Global recession is coming: Trump's trade war charges South Korea and Japan

On Sunday, Trump decided to move forward with new tariff rates of 15% for clothing and other Chinese imports totaling around $ 111 billion. The new tariffs come in addition to the 25% tariffs previously imposed on about $ 250 billion in Chinese imports.

No one should be surprised that the knock-on effect of Trump's trade war hurt South Korea and Japan

South Korea said Sunday exports to China fell by 21[ads1].3% in August compared to the same month the year before, and exports decreased overall by 13.6%. And Japan said on Monday that the country's capital expenditures fell 6.9% in the April-June quarter, the first two-year decline, as the companies struggled with an almost double-digit decline in exports to China.

"Given that there is no sign of improvement in Japan's exports due to US-China trade friction, and the decline in producers' profits and capital expenditures is expected to continue," said NLI Research Institute analyst Taro Saito.

After decades of growing economic interdependence, China exports a small portion of its total production to countries such as Japan and South Korea, and in Japan's case, exports to China represented 2.8% of gross domestic product in the year ended March 2019. But fall in exports could trigger a wider downward cycle of leading companies to reduce investment or by making consumers more cautious.

Manufacturing Recession

August 2, I commented on Global Manufacturing Recession Started: Trump's China Tariffs Made Matters Worse [19659008] It is becoming increasingly clear that this is the right vision, but what about a real recession?

How much lead time do you expect? [19659010] Once again, consider producing downturns vs. real recessions: How much lead time do you expect?

For further discussion, see Debunking the Myth "Consumer spending is 67% of GDP."

Mike "Mish" Shedlock

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