The Trade War Is Trump’s Afghanistan, Says PIIE’s Posen

The video discusses the potential ineffectiveness of US intervention in currency markets, especially given the large daily turnover compared to US reserves. It highlights the impact of tariffs on the US economy, including reduced foreign investment and technology flows. The trade war between the US and China is likened to an unwinnable conflict, with both countries suffering losses. Smaller countries like Vietnam may benefit from trade diversion, but overall, the global market environment is deteriorating.

Why is U.S. intervention in currency markets considered unlikely to succeed?

• The Federal Reserve is not interested in participating.

• The U.S. dollar is already undervalued.

• The U.S. reserve pool is too small compared to daily market turnover.

• Asian countries have stronger currencies.

What is one indirect impact of tariffs on the U.S. economy?

• Increased foreign investment in the U.S.

• Decreased attractiveness of the U.S. for foreign investors.

• Strengthening of the U.S. dollar.

• Improved access to foreign markets.

How is the trade war between the U.S. and China described?

• A beneficial situation for both countries.

• An open-ended and costly conflict with no clear victory.

• A strategic win for China.

• A clear victory for the U.S.

Which countries might benefit from the U.S.-China trade war?

• Only China

• Large European countries

• Smaller countries like Vietnam

• Only the U.S.

What is a potential consequence of the trade war for emerging markets?

• Worsening economic environment

• Increased political stability

• Greater access to U.S. markets

• Improved economic conditions