Good Will Is a Thing of the Past in the Trade War
China has taken the gloves off by allowing its currency to weaken beyond a key leve to the dollar.
Both the U.S. and China have much to lose in an escalating trade war.
Photographer: Bloomberg
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As far as financial markets are concerned, the trade war has finally broken out. Barely a week ago, on July 26, after more than a year of vocal hostilities, the S&P 500 Index was at a record high. Although much discussed, the trade conflagration had little impact on markets, and little damage was priced in. Working on game theory, investors noted – correctly – that some of President Donald Trump’s greatest threats of 25% tariffs had never come to fruition and that both sides had an interest in reaching a deal.