Update 2: Donald Trump wants lower wages. He also wants lower interest rates. But lower rates in a low inflationary environment could increase wages even faster!

Update 1: purchasing power parity coupled with a manufacturing base 5 times larger than the USA means China can make what it needs. We cannot and therefore, we could lose a trade war.

This isn't a game for the American consumer, Leslie. 70 percent of shoes sold in the US and one third of the clothing sold in the USA comes from China! Serious costs await the American consumer. Add to this the Chinese don't want a tariff solution, and Trump wants to make up ground whatever that means. The only way around this is for Trump to keep US companies from giving up tech transfers while not forcing China to change its laws. Tech transfer is not illegal. Tech from other nations will gain an advantage in doing business in China over constrained US companies. But if that is what Trump wants, at least it would allow for a deal and circumvents the impasse about tech transfers.

Update 3: Citizen boycotts are highly effective in China. A people's war against the USA is exactly that sort of boycott. It was called for by the official Chinese media in a primetime announcement last night. This will be worse than any official tariffs that China imposes. Wall Street is asleep. #CNBC #tariffs

Update1: Farmers are beginning to break ranks with Trump. What they need to realize is they voted for their doom when they first put him in office. He was tariff man years before being elected to office. Now China's people's war, initiated today, will be effective as it has in the past. The Chinese citizens will vote on the trade war by boycotting America, even though they had started buying more product from the USA. That growth will be gone. Chin's citizen boycotts of other nations have been amazingly effective. America is losing 1.4 Billion customers because we have a novice in the White House who has surrounded himself with radical thinkers.

I think a solution to the trade war can be ruled out. Here is the sticking point. It is not against the law for a sovereign nation to require tech transfers as a requirement to do business. Yes, GDP is slowing, but now we have the national boycott of all things American in China. Chinese boycotts are very effective.

The silly market doesn't understand that a People's War means the Chinese will boycott all things American. Wall Street is thick as a brick.

Author says:

"Trump should prohibit American corporations that possess technologies that are critical to national security from sharing them with China – even if that’s the price of gaining access to China’s lucrative market,

Bar them from entering into joint ventures with Chinese corporations, prevent them from teaming up with Chinese state-owned companies, and demand that they guard their technology."

But that is as foolhardy as the trade war itself. The companies are not owned by the United States government.

China should buy more UST's. It could push the yield down to really scary territory. Selling treasuries does not seem to be an option. However, the weaker Juan may have little to do with Purchasing Power Parity and may not hurt the Chinese economy at all.

Update 2: Trump has now said that the tariffs on the remaining 325 billion dollars of Chinese products are undecided. That is NOT good enough! He must say they are off the table or the statement must be ignored by Wall Street. If it is not ignored by Wall Street, we have to conclude that Wall Street knows very little about anything it analyses.