The victory of President-elect Donald Trump in the US elections has raised widespread concerns about a renewed trade war between United States and China. Expectations indicate that this trade war could lead to a significant decline in Chinese economic growth during Trump’s second term. According to Macquarie Group. Chinese economic growth could decline by about two percentage points as a result of the escalation of tariffs.
During his election campaign, Trump pledged to increase tariffs on Chinese goods to 60%, which could cause China’s exports to decline by 8% next year. Such a significant decline in exports would directly affect China’s GDP. It would also lead to a decline in corporate capital spending and business confidence, adding to the economic challenges.
Under these pressures, the Chinese government may have to step up support measures for economy. If the new tariffs are imposed, it will be necessary to launch an economic stimulus program worth 3 trillion yuan ($420 billion) to offset this negative impact. In addition, China will need to inject another 3 trillion yuan to stimulate weak domestic demand. which is suffering from a decline in consumption.
According to economists Larry Hu and Yuxiao Zhang. a renewed trade war could spell the end of China’s current growth model. Which has been driven mainly by exports and manufacturing. In this context, it will become necessary for economic growth to shift to a model that relies more on domestic demand. Especially consumption, as has been the case over the past decade.
These shifts could change the nature of the Chinese economy in the long run. With domestic markets becoming main driver of growth. This change, if realized, would have a significant impact on global financial markets and trade. As China would have to reassess its economic policies to meet its domestic needs.
In the rush to win, don’t forget the Federal Reserve’s decision today
Weak employment has helped to bolster expectations of a rate cut in the US, as data from October showed that the labor market is still struggling. The recently released employment report showed that only 12,000 jobs were added to the US economy, far less than expected. This drop in employment could increase the likelihood that the Federal Reserve will cut interest rates at its next meeting.
The data suggests that the numbers were significantly affected by adverse weather conditions, as the last two hurricanes. As well as the Boeing strike, affected the labor market last month. The figures for the previous two months, August and September. Were also revised to show a greater weakness in employment than initially estimated.
Despite these negative developments, the unemployment rate in the US remained stable at 4.1%. Indicating that the labor market remains in relative balance, despite the challenges it faces. This data provides further indications that the Federal Reserve may be heading towards lowering interest rates. which could boost the economy in the coming times. It is worth noting that the potential reduction in interest rates would contribute to facilitating access to loans. Which may stimulate consumer spending and investment. This would also affect asset prices and financial markets in general. In this context, it has become clear that the move towards reducing interest rates may be a necessary step to support the US economy at this stage.
Although political news, such as Trump’s victory, receives a lot of attention in the media. The Federal Reserve’s decision on interest rates today is considered a pivotal step that directly affects the US economy in the long term. Therefore, it is necessary to follow the developments of these economic decisions to assess the extent of their impact on global markets.
Asian currency traders prepare for the Fed’s decision and China’s expectations
Asian currency traders have yet to fully recover from Wednesday’s sell-off, but are bracing for the economic risks ahead. On trading desks across Asia, analysts warn that losses could continue as the US Federal Reserve’s monetary policy decision approaches. In addition to the conclusion of a meeting of Chinese lawmakers on Friday.
If the Fed signals a slowdown in the pace of interest rate cuts, or if Beijing’s decisions fall short of investors’ expectations, Asian currencies could find themselves under additional pressure. These developments are expected to have a significant impact on the stability of currencies in the region.
The stability of Asian currencies has become a major topic of discussion recently. After the US elections sparked a massive sell-off in currencies. This situation has led to the yen approaching the 155 level against the dollar. While the yuan on the local market has hit a 16-year low. Some strategists have warned that a new round of US tariffs could prompt some countries in the region to devalue their currencies. increasing market volatility.
“There seems to be no respite for Asian currency traders this week. Trump’s victory has strengthened the dollar, and investors should now be prepared for any surprises from Fed or the Chinese National Assembly,” said Shoki Omori, chief trading strategist at Mizuho Securities.
Traders may have to watch these events closely. As any surprise move by the Fed or the Chinese government could lead to significant volatility in currency markets. For example, if the Fed decides to slow down interest rate cuts, it could strengthen the dollar. Putting further pressure on Asian currencies. On other hand, if the Chinese parliament’s decisions do not meet investors’ expectations. The yuan and other Asian currencies could fall further. These developments highlight the importance of traders being prepared for all eventualities.
Trump’s victory could prompt the Bank of Japan to raise interest rates if the yen continues to weaken
A former Bank of Japan official has warned that Donald Trump’s victory in the presidential election increasing uncertainty in global economy. He also suggested that the yen’s decline following the election results. Could prompt the Bank of Japan to raise interest rates in the near future. If the trend continues.
“Uncertainty has increased not only for the BOJ but also around the world as a result of the U.S. election,” Kazuo Mama. A former executive director of the Bank of Japan, said in an interview on Thursday. He explained that the sharp decline in the yen’s value could be a possible reason for the Bank of Japan to raise interest rates.
The yen fell significantly after Trump’s victory was announced. At midday in Tokyo on Thursday, the Japanese currency was trading at around 154.40 yen against the dollar. This sharp decline in the yen’s value has raised concerns about its impact on economic stability.
Mama points out that Japan could face significant challenges if the yen continues to decline. This could lead to higher import costs, especially for basic goods, which would boost inflation and affect citizens’ purchasing power. In this context, the Bank of Japan may feel pressure to raise interest rates as a measure to counter these inflationary pressures.
If the Bank of Japan decides to take this step. It could signal a shift in the bank’s policy focus on keeping interest rates low to support economic growth. But raising interest rates could be a risky move at a time when the Japanese economy is still in recession.
On the other hand, raising interest rates could strengthen the yen, which would affect Japanese exports. Although Japan relies heavily on its exports, a stronger yen could make its products less competitive in global markets.
