After consideration of the $50 Billion tariff by the US
placed on China, many have wondered what it would entail going forward in terms
of the market, especially those targeting the aluminum market. Some individuals
spoke on the possible threat this may induce on other markets considering
in example, China is known for being “one of the largest buyers of US crops,”
(CNN). However, in an interesting turn of events, the US has actually sanctioned
higher demand in the Japanese Aluminum trades; and in turn created a higher
appreciation than previously predicted of the Yen when compared to the US
dollar. Japan is currently in between negotiations of seeking lower tariffs
from the US, as they were not among the group of countries that were exempt, since the Trump administration’s focus
was to hit China hard. Even without the tariff exemption however, imagine the strength
gained and position in the market as a response following the plans for Japan
to become the primary suppliers. I find the times quite intriguing of when it
comes to: how one country imposing higher tariffs hitting a second country,
will then create this large of an appreciation on a third country’s currency –especially
since learning of the Plaza Accord. Yes, at that time (in 1985), the focus may have been
between the depreciation of the US dollar and appreciation of the Japanese Yen for
the prosperity of the market and its advancement. In a way, this has provided a
similar boost to the future growth in market, and at the same time, has
appreciated the Yen without depreciating another currency. It doesn’t feel too surprising
(shutting down one opportunity of a market means moving to a second provider at
a different price), but it certainly does bring an interesting change to the trade
game, and the ever curiosity of what may come.
1 comment:
It is interesting to see how Japan wants to maintain their international competitiveness by keeping cooperative relationships with the U.S. The third party always benefits from the tussle in a fight.
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