Trump's Feud With China Is A Carbon Copy Of Reagan's Trade War With Japan: Is A New Plaza Accord Imminent?

Name the US trade-war adversary in the following real-life scenario:

Trade tensions were precipitated by a large bilateral trade imbalance and a perception of an “unfair” advantage, which were exacerbated by new US administrations that pursued tax cuts even as the Federal Reserve was in tightening mode.

Targeted US trade actions have failed to significantly reduce the US trade imbalance with this nation

As the US trade deficit with this country has continued to grow, so has bipartisan political pressure to do something about it.

Dollar depreciation coincided with a fading fiscal boost and more accommodative monetary policy that was directionally consistent with the political aim of boosting exports.

Under growing bipartisan support, the US pushed this nation to take more sweeping action such as pledging to increase imports, and significantly cut its trade surplus, or potentially face a 25% tariff on all of its exports.

If you said the nation in question is China, and the year is 2019, you are wrong (well, partially), because the events described above represent Ronald Reagan’s bilateral trade dispute with Japan in the early 1980s.

The fact that the biggest geopolitical conflict of modern times is running off a 35-year-old script This has profound implications for not only how Trump’s own trade war with the world’s second most powerful nation will conclude, but also for the dollar, because it was against the above-described backdrop that authorities signed the historic “Plaza Accord” in 1985, and according to Goldman, a similar outcome may be coming,

Keep reading this article on Zero Hedge - Blog.

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