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Macroscope | Why a weaker euro means Trump’s trade war may not be so easy for him to win
Neal Kimberley says moves by the European Central Bank and Federal Reserve may result in a weaker euro against the dollar, affecting the price of US exports and imports, and undermining the president’s aggressive trade moves
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“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” tweeted US President Donald Trump in March. But as international trade tensions again escalate, the White House might be about to discover that winning is not that simple.
For example, the Trump administration’s announcement on Friday of “a 25 per cent tariff on US$50 billion of goods from China that contain industrially significant technologies” prompted an equivalent but deliberately targeted response by Beijing on, among others, a variety of US agricultural exports.
With US midterm elections in November, Beijing might well be making the political calculation that the Trump administration will be sensitive to complaints from US farmers ahead of the polls.
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Additionally, Beijing is not the only one experiencing trade tensions with Washington. The European Union and the United States are also engaged in a trade dispute that has led to tariff impositions by both sides.
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