Yes, it’s Christmas Day. Bah Humbug. Also, the family won’t get here for a few hours, and I wanted to put something out as background for tomorrow’s column.
So, I’m thinking about the Trump trade war, which is looking increasingly likely — especially because U.S. trade law gives the White House remarkable leeway to go protectionist without legislative action. That wasn’t the law’s intent; but do you think this guy will care?
What happens if the protectionist-in-chief goes ahead and does it, as I suspect he will?
Claims that there would be huge net job losses are extremely dubious. But what would happen would be a global trade war, which would disrupt the existing economic structure, which is built on elaborate international supply chains.
In the long run, a new structure with shorter chains would be built. But in the meantime, some industries, some factories, would end up becoming sudden losers — in the US as well as in developing countries...
That is, I’d argue, the way to think about the coming Trump shock. You can’t really turn the clock back a quarter-century; but even trying can produce exactly the kind of rapid, disruptive shifts in production that fed blue-collar anger going into this election.
In Friday's EPJ Daily Alert, I actually put out some very aggressive recommendations to position investments defensively on the possibility that Trump is going to launch a trade war right out of the gate when he takes over as President.
There was a specific development, identified in the ALERT, that prompted me to act so quickly.
The Fed is not likely to end the boom in the stock market anytime soon, but The Donald could with a trade war.