Trade Fighter ™️
Street Fighter - Trade War Edition
In order to make sense of today’s “Trade War”, you can study all the historical precedents you like, but at the end of the day it’s just a clown show. At least we are having fun.
Personally, it reminds me more of the classic video game “Street Fighter”. For those who missed out on the finer things in life, this game is a “worldwide martial arts tournament” spanning various countries. Incidentally, Street Fighter was made in Japan and launched in August 1987 … just before the October 1987 crash <insert ominous music>.
The point of Street Fighter, and frankly any self-respecting game, is that in order to progress to the next level, you need to beat the current opponent. Only then do you reach the “Boss Level”.
To make it even more exciting, each fighter has a “Special Move”, the most famous being main characters Ruy and Ken’s “Hadouken” attack <Seriously, did you people never play Street Fighter?!>
Back to our Trade War…
What we are unwillingly living through now is a variation of Street Fighter that I will call: Trade Fighter ™️.
ROUND 1: USA vs JAPAN (Easy Mode)
The Japan trade deal was supposed to be a walk in the park. Japan has covertly debased their currency by 30% since 2020 and runs a $63bn trade surplus vs the US.
All that Bessent had to do was ask the Japanese to stop manipulating their currency, get them to buy a few American cars and deal done …Unfortunately, none bothered to check that the Japanese drive on the other side of the road which would require the US manufacturers to shift their assembly lines.
But Japan is now playing hardball, and even threatened to use its “Special Move”:
Japan holds >$1 trillion in US Treasuries, making them the largest holders of US Treasuries in the world. “Weaponizing” their UST holdings would bring havoc to the US Financial System (yes, they denied they would do it, which is what you would say if you intend to do it).
But fear not. Japan currently faces a shortage in … RICE and actually wants to buy rice from the US, I kid you not (source). The US exporting rice to Japan so that Japan can keep making sushi rolls is so “meme”…
*USA Special Move: “Hadouken-Yen”.
*Japan Special Move: “Sell US Treasuries”.
