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Beware the politics of deficits and trade

In a midterm election year and with a judicial investigation pending, the Trump administration's fiscal stance has to veer from exacerbating the trade deficit.

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In the event of a US-China trade war, exporters in both countries are obvious losers. However, import demand is rarely substituted by domestic producers and typically would draw on third-country providers.

GROWING US fiscal deficits could not only accelerate the pace of interest rate hikes, but also generate turmoil where they intersect with the politics of trade. Even as we shift away from the age of easy money, central bank decision-making will rightly continue to hold the market's attention....

sentifi.com

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