The battle to determine the global champion occurs every 200 to 300 years. It has been over a century since America last displaced England from its position. Now, America is defending its title against China. Ray Dalio has outlined eight key indicators that define a global champion. These include:
- Education
- Innovation and technology
- Financial center
- Currency power and resources
- Military strength
- Gross domestic product (GDP)
- Trade
- Competitiveness
When Trump became president, he quickly announced a 10 percent tariff on all Chinese goods. In retaliation, China took measures of its own. Since the onset of the trade war, China has been working to reduce its reliance on the U.S., with only 15 percent of its exports now going to America. They are well-prepared.
It remains uncertain whether the side effects of these developments will be positive or negative for countries like ours, which are watching this battle from the sidelines. However, we can make a few predictions.
One likely outcome is a positive impact on coal exports. China imports about 10 percent of its coal, with over 60 percent of that coming from Mongolia. With China’s tariffs on U.S. coal, Mongolia, Australia, and Russia are well-positioned to fill the gap. Although coal prices have fallen by about 30-40 percent, the quantity of coal remains crucial.
Will inflation rise from imports? The core of tariffs and taxes lies in the understanding that the cost of products increases. When a country implements tax policies, prices tend to rise, and manufacturers pass these costs on to consumers. Approximately 40 percent of our inflation is related to imported goods.
There is a sense of uncertainty in the air. Behind every economic decision are individuals, especially a small group of influential figures. The growing uncertainty surrounding tariffs could potentially affect business activity and investor confidence, which may lead to a depreciation of the exchange rate. As observers, we are likely to feel these indirect effects in unpredictable ways. It is important for us to carefully manage risks and continue to monitor the situation.
Source: https:ikon.mn
