Stansberry Research Digest On The Fast-Approaching Trade War.

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The Looming Trade War

According to a recent publication by Stansberry Research, there has been surmounting pressure on the Bank of Japan’s Governor Haruhiko Kuroda to follow the lead of the Federal Reserve and European Central Bank to normalize the interest rates. This is in exact opposition to the strategy employed in an attempt to reach the targeted inflation rate of 2% by greatly cutting back on interest rates and increasing emphasis of quantitative easing strategies. The continued approach to inflation targeting using the current methods will lead to an eventual deflation; a scenario Haruhiko would like to greatly avoid.

This has not been made easier as it has become evident that the U.S. President Donald Trump announced the introduction of tariffs on steel and aluminum imports into the U.S. of 25% and 10% respectively. This is a serious issue because the steel and aluminum industry have seen an enormous shed of jobs since 1953 of 80% and an increased inclination towards outsourcing. This will therefore mean the prices of commodities such as canned food and beer will increase in order for the manufacturers to push the cost down to the consumers; that is an unnecessary tax hike to the American people.

In reciprocate; the European Union will impose a similar tariff on all U.S. consumer goods, a move that will be backed up by China pulling off a similar retaliatory tactic. Hence the looming trade war.