2018-07-13caseyresearch.com

China didn't take [Trump's initial] tariffs lying down... Instead, it responded by imposing tariffs on $34 billion worth of U.S. goods.That led to an even bigger retaliation by the White House. On Tuesday, Trump announced 10% tariffs on $200 billion worth of Chinese goods.

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China has vowed to "strike back hard, and launch comprehensive measures that match the U.S. move in quantity and quality." This means China could introduce more tariffs. It could also further devalue its currency to stay "competitive," which would encourage Trump to introduce even more tariffs.

In short, everyday goods could soon get a lot more expensive. And that's the last thing working-class Americans can afford... [And now] inflation is already creeping higher... We can see this in the Consumer Price Index (CPI), a broad measure of inflation. It's rising at its fastest pace since 2012.

The Producer Price Index (PPI), another popular measure of inflation, is also climbing fast. In fact, it just had the biggest yearly jump in nearly seven years.

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If the trade war escalates, other companies will have no choice but to [pass prices along to consumers]... And that could take a huge toll on consumer spending, which is by far the biggest segment of the U.S. economy.



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