Once, the idea of the US heading into a full-on trade war would seem ridiculous. The biggest economy in the world when it comes to the total sum of parameters, the United States has always been a big proponent of open market trading, at least when it comes to the global scene. In many ways, the same is the reason why the country managed to attain such an important economic and geopolitical position in such a short time period and then evolve it to a dominant position after WW2.
However, the current (unpredictable) agenda of the president Donald Trump is an anomaly in many ways and the global trade appears to be no exception. What was once just a fanciful idea that many economic advisors dismissed outright on either side of the Atlantic and Pacific, as well as the US land borders, has now become reality.
Not only is the world seems headed to a series of trade wars, but these will also apparently be taking place between the US and its allies. The biggest players in this trade war game that are opposing the US are, apart from China, the EU, and Canada.
As the world economy slides into uncharted waters in the modern era, the crypto holder and traders are trying to figure out what will this process mean for their targeted markets. Here is an analysis of what could these trade disputes and their effects provide to the cryptocurrency market in the upcoming turbulent period.
The Long Way to a Trade War
The genesis of the upcoming trade conflict is in many ways the same path that led to the Donald Trump being elected. It is based on real grievances but at one point the disputes got blown up to a huge problem that seems now to be headed only into direct confrontation.
The key underlying element of the whole process that led to this is the US switch from a manufacturing economy to a service one. This happened gradually, as the big giants of manufacture slowly began moving their plants overseas, looking for cheaper labor and higher profit margins. At the same time, what were once domestic US ventures were fast becoming international conglomerates.
All of this was allowed thanks to, in part, global trade and open border opportunities for businesses between many of the world’s industrial or developing nations. The process, naturally, led to huge wealth being generated, but its partition became more global as well as complicated.
Essentially, it allowed for many urban US areas to become even more developed and slowly shift towards an economy which is service-based. Financial, tech and educational industries arouse from this option, but they were made and stayed focused on the coastline of the US. The interior, which was taken to huge heights of industrial development in the late 19th and early 20th century was largely left out of this process.
Places like Detroit are a perfect example of this change and also a reminder of the disparity between the winners and losers of the manufacture-to-service switch. The platform on which Donald Trump won the presidency included a sort-of reversal of this process and a return to better economic conditions of the interior US states and manufacture industries of the land.
Good Old Days
A part of the Trump’s plan to protect the fledgling US manufacture industry is to set up tariffs for the import of steel and aluminum into the country. There are also other tariffs that are being discussed in what appears to be a loosely led discussion and negotiations with their trading partners.
However, at the same time, tensions continue to flare up while others are mysteriously quenched. For example, tariffs for Chinese products were a much bigger issue just a couple of months ago, when it became known that the country is preparing its retaliatory measures, but using a special mechanism.
Instead of going for the things that are traded to China from the US, the country’s government decided to target industries that have shown majority political support to the current US president. This was a roundabout way of increasing pressure on him directly through pressure on his supporters in these industries.
The tactic seemed to be paying off as the US began focusing on the trade war with the EU and Canada. These discussions, often very public ones, were followed by a quagmire of accusations and harsh words. All the while, there is a strong sense that no one on either side has a clear indication of what their country is actually aiming for.
Crypto Opportunities or Threats
Basically, the trade war would be great news for the instability of the traditional markets, which would translate to the strengthening of the crypto ones. This was for a range of years a tried and tested way of hedging against the violence of market volatility.
Right now, however, the problem is that both traditional and crypto market seem to be moving in unison. Currently, when it comes to bitcoin, for example, which is used for everything between loans and online BTC betting, the price changes do not seem to correlate with trade war news.
The same goes for the lack of any major threats that the crypto field is facing. The trade war, looming or active, seems to be steering clear of this domain, at least in the short-term.
Future of the Global Economy
While the crypto markets might be insulated from the trade disputes, they are not from the overall state of the global economy. Right now, it seems that this process can jeopardize the global trade on an unprecedented peacetime scale.
This will lead to the loss of liquidity for anyone continuing small investors, corporations and anyone in-between. The crypto market, which is always looking for new adopters, needs this liquidity and access to investment funds.
With this in mind, it can be said that cryptocurrencies, like many other digital ventures, including eSports, next-generation social media and so forth will suffer from a trade war or wars. Thanks to this, it is no wonder that many in this domains are hoping they do not occur.