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Trade & currency wars

The U.S. department of Commerce announced yesterday it has revoked the Chip export licenses of Intel and Qualcomm to Huawei, in China. Microchips are one of the most important and valued goods exported to China, and one of the few items that compensates the big trade deficit the U.S. runs with the second largest economy in the world. Perhaps this is an isolated case, or maybe it is the start of a new trade war. Perhaps this is a Jiu Jitsu move by China, creating a bigger trade deficit for the U.S. and therefore a bigger negative impact on US GDP. Additionally, what is China going to do with the dollars it receives from the US for those goods sold? it seems It is no longer interested in buying Treasuries, preferring gold to increase its foreign reserves, precisely at a time where the U.S. needs to sell more long term Treasuries to finance the budget deficit. At the same time, China wants to continue heading the AI race, and therefore needs Chips, where the only meaningful alternative is located across the straight, in Taiwan, which wants to invade and control. Who is pushing who?


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