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Amid the whirlwind of headlines that focus on coming and going between China and the United States, and the continued escalation of fares, the effects of training and the victims will be far-reaching. As with many other things in life, there will be winners and losers, but maybe not among the usual suspects.
The power of buying, at least for consumers in some important markets, can be one of the first casualties. Where the power of purchase diminishes, the excitement over spending is too. Can we tighten the open principles of cross-border trade here?
First, a little mechanics. Bloomberg reports that currency fluctuations are likely as the United States comes to impose a new series of tariffs on China, and reciprocity is looming on the horizon. Devaluation means that badets lose value. In relatively developed markets where individuals (and, yes, businesses) hold badets that are typically used for income or security in a difficult economic environment, the effect of wealth declines. If the goal is, at least from the point of view of the Trump administration, to boost exports and reduce imports, the resulting joker is the exchange rate. The dollar remains strong
The currency sweeps
Other currencies, weakening them, can improve the competitive positioning of their countries of origin on the world stage . Take the example of India, where the rupee reaches or approaches registered lows, making the country a beneficiary of increased clamor for its exports.
All of this may bode well for economies that are not United States – at least when it comes to finding end markets for finished products
Central Banks are likely to re-examine monetary policy, which, at the time of low interest rates, means asking oneself whether they should be stimulated. It had been a little bit ahead of time before the trade war started to flourish. Thus, with the weakening of the currencies of other countries, exports from these regions will increase, which will deepen the US trade deficits with these countries.
The United States should also be cautious, because the increase in currency interest rates, attract investor interest, appreciate and slow down exports. It is a difficult balancing act
Among the winners …
We mentioned earlier that there will be winners. Avoid the traditional debate about steelmakers and farmers and the verticals where tariffs were collected (10% here, 25% there and soon everything starts to accumulate), if only for a moment .
Rates on soy? India boosts its exports? Believe it or not, there is a drive effect that goes beyond the pricing of commodities – in the case of the first or the general trade deficit between two nations in the case of the latter. Impacts come to the larger scale payment ecosystem ultimately, and can change the way we pay and where.
Here is an example: It has been well documented that India has adopted digital payments. Although the goal of the past is to reduce black market activities and help the government to collect more tax revenue, the change also has the advantage of bringing in large and small businesses on the global trading scene and can benefit those who offer the means to do so (such as Paytm, which already accounts for transactions and users by billions).
Cross-border payments are indeed heating up, and the technology will of course continue to move forward. The move to bits and bytes ensures that geographically remote and high-speed supply chains speak a common language. Companies are planting flags themselves in these places. Take the example of Airwallex, which announced a few days ago $ 80 million to strengthen its international presence in such diverse (and linked) corridors as Asia, Europe and, of course, the United States
. the trade war, again, in a way that seems a little less obvious – at least initially, if the consumer becomes cautious. Earlier this week, a stock market enthusiast, TV show host and investor, Jim Cramer, said that Mastercard and Visa remained "unbeatable" covers against the trade war. The thought is that they do not stay exposed to China – but they want to get there. If the Chinese government sits down with these companies and offers some level of entry into the country, Cramer notes, the trade war could be halted (at least on Trump's side). This is a somewhat radical statement, but it speaks of a general principle of a trade war: standardize the rules of the game.
Economists can claim that tariffs are clumsy tools to use in such efforts. But on a larger scale, such a move that Cramer seems to advocate would open up new markets for card giants, bringing new ways to pay the Chinese. Offering new ways to pay hundreds of millions of consumers would have a positive effect on world trade. So, eventually, a US Heartland retailer, perhaps in the not-too-distant future, could sell to a Chinese consumer using a Visa credit card, all by dint of a trade war.
wings, and somewhere on the line blows a hurricane, to paraphrase the old saying. In other words, watch out for the driving effects of this trade battle, beyond the horizon today.
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