Options Imply U.S. May Struggle To Win Trade War With China

Seeking Alpha | May 23, 2019 at 10:22 AM
  • Chinese President Xi Jinping has more tools at his disposal than his American counterpart, Donald Trump, to deal with the potential negative effects of tariffs, say Myron Scholes and Ash Alankar of the Janus Henderson Adaptive Asset Allocation Team.
  • U.S. President Donald Trump underestimated Chinese President Xi Jinping’s resolve when he raised tariffs on about $200 billion of imports from China to 25% from 10%, warning his counterpart not to respond in kind.
  • When combined with generationally low U.S. unemployment, such inflationary risk limits the Federal Reserve’s (Fed) ability to offset the impact of duties through monetary easing.