HOW THE TARIFFS AND SANCTIONS CAME BACK TO BITE THEIR MASTER

 
If you’re going to use a guard dog to protect your sheep, you had better choose and train the dog wisely. There is nothing sadder than a guard dog that bites the sheep and the shepherd while the wolf dines on rack of lamb. Every nation is a shepherd trying to protect its flock. America is such a shepherd. However, Iran, China and India are shepherds too, and the American guard dog was charged with fending off the wolf. Instead it attacked the other shepherds and their flocks, bringing down their wrath on its own master. And now America is reaping the consequences of this thoughtless action.
 
Our translation of a Russian-language article posted yesterday showed that profligate US spending policies are threatening the dollar by scaring away investors in Treasuries.
 
Today’s translation, from Ria Novosti, with commentary by Vince Dhimos, indicates that India is also planning to bolt away from the US dollar in international trade settlements, and the reason for this is, of course, US sanctions and trade tariffs. You’d think US politicians and policy makers had never heard of unintended consequences. It is really pathetic to watch.
 
Now we see how the anti-Russian and anti-Iran sanctions on third parties are boomeranging, ie, not only inducing India to trade with Russia and Iran in local currencies, bypassing the USD, but also driving India and China, initially strategic adversaries, together, to the detriment of the US.
 
Let’s also not forget that Turkey, Qatar,  Egypt,  Nigeria, Zimbabwe, Venezuela, Malaysia,  Algeria, Indonesia, Iraq and others are using non-dollar currencies, mostly yuan (renminbi) in at least some of their international trade settlements.
 
And according to yicaiglobal.com, 14 African countries are weighing the use of the yuan in trade settlements. According to Zambia’s Mail & Guardian, a branch of the Bank of China in Zambia is offering renminbi banking services.
 
Reuters reports that China and Australia are establishing a direct currency trading source.
 
In addition, since the US has unofficially declared war on Syria, it is unlikely that that country will ever trade in USD again.
 
Further, Hong Kong based law firm King & Wood Mallesons reports, surprisingly, that even Saudi Arabia is expected to yield to Chinese pressure and start trading in yuan. If this happens, it has the potential to trigger an economic plate shift. (NSS has posted numerous analyses of the enormous influence that Saudi Arabia has had on US policies, eg, here, here, here, here and here).  The direct and hard-hitting accusations of US politicians against MBS in the wake of the Kashoggi affair (intended, of course, to smear Trump) may trigger a retaliatory action that could include a switch from dollars to yuan by the Saudis that would spook investors and further discourage them from purchasing Treasuries.
 
At any rate, the fact that Trump and his allies in Congress keep wantonly using the dollar as a weapon suggests they have little idea of what is just around the corner.
 
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https://ria.ru/20190110/1549150802.html
 
Elephant move: India has dealt an unexpected blow to the American economy
 
MOSCOW, January 10 - RIA Novosti, Alexander Lesnykh.
 
Since January 31, the Government of India has imposed 30 percent duties on American agricultural products. We are talking about goods worth 857 million dollars - more than a third of food imports from the United States. RIA Novosti reports on why Delhi is retaliating against Washington and why experts see a "Chinese footprint" in this.
 
Year of grey hair
 
Although China was and still is the front line of the trade war for Washington, President Donald Trump managed to pretty much strike a nerve with Indian Prime Minister Narendra Modi.
 
It all started back in March, when Trump announced duties on steel and aluminium of 25% and ten percent, respectively. Along with their colleagues in Russia, China, Europe, Japan and other countries, Indian metallurgists were also hit.
 
But India also suffered because of its military-technical cooperation with Russia. In April, the White House included Rosoboronexport in the sanctions list in accordance under the Countering America's Adversaries Through Sanctions Act (CAATSA), and Indian banks had to freeze the $2 billion tranche intended to pay for repairs to the Chakra nuclear submarine leased from Russia (Project 971 Shchuka-B). Otherwise, there was a risk of losing the ability to conduct operations in US dollars.
 
In early May, Trump announced his withdrawal from a nuclear deal with Iran, promising to restore sanctions against Tehran and all those who cooperate with the Iranian authorities. Obviously, this was also directed against China and India, the two main buyers of Iranian oil.
True, the US president gave Beijing and Delhi a 180-day grace period to search for new suppliers. But at the same time, as reported by RIA Novosti, in the US Department of State, the account had to be settled from a special escrow account. It is opened by the purchasing country, and the money transferred to it can be spent by Iran only on humanitarian goods, which Washington grants permission to buy.
 
It is worth noting that Trump agreed to a postponement not at all out of the goodness of his heart, but as a result of tough negotiations that lasted for six months. A source in the Indian Foreign Ministry informed RIA Novosti of this in early November.
 
Serve cold
 
The size its the economy does not allow India to respond symmetrically to US duties and enter into an open confrontation with Washington the way China does (according to the World Bank, India’s GDP in 2017 was 2.6 trillion dollars, China’s was 2.2 trillion).
 
Due to Washington’s aggressiveness, Beijing and Delhi shifted for the first time in a long time from economic confrontation to coordinated measures against US pressure. Even though India and China are, in fact, strategic rivals in the Asia-Pacific region.
 
Keep your eye on the hand
 
Meanwhile, Delhi and Tehran agreed to abandon the dollar in payments for oil and in January switched to paying for supplies in rupees. This was reported to Reuters by the executive director of the Indian state UCO bank Charan Singh.
 
Earlier, the same agreement had been reached with Russia. In early November, Deputy Prime Minister Yury Borisov announced that India would pay for the S-400 Triumph anti-missile systems in roubles. In the future, it is planned to expand mutual trade in national currencies and in civilian production.
 
In practice, this means that for key foreign trade positions India is no longer dependent on the US currency. On December 21st, Sushma Swaraj and Wang Yi, the foreign ministers of India and China, met in New Delhi. The media gave it short shrift, but it can hardly be considered a coincidence that two weeks later, India announced duties on overseas apples, almonds, hazelnuts, lentils and chickpeas. Moreover, Delhi warned that in the future the restrictions would affect some products made of iron and steel, boric acid, parts for pipes and motorcycles.
 
Recall that last fall, Beijing also introduced duties on American agricultural products - at the rate of 25%. It hurt farmers who supplied wheat, corn, dairy products and pork. The soybean market suffered the most - exports to the PRC collapsed by 98%, which led to an overproduction crisis (soybeans accounted for about 60% of all agricultural supplies to China).
 
There was simply nowhere to store the. Even after the rental price of granaries rose 40% compared to last year, they all were crammed with soy that no one needed. The only thing left for the farmers was to destroy the crop by burying it in the ground.
 
Now the same sad prospect looms because of the Indian duties. Note that the farm states were Donald Trump’s electoral mainstay in the 2016 presidential election. In 2020, apparently, he will have to forget about support from farmers.
 
To remedy the situation, the White House organized a $15 billion aid program for farmers. However, due to disputes with Trump over the construction of the wall on the Mexican border, lawmakers refused to approve the budget for 2019, and all government spending is now frozen indefinitely. Including the money for the program to support farmers.
 
Obviously, it was no coincidence that India and China came closer together last year, having held a series of meetings (the one that took place on 21 December in Delhi was not the only one) after many years of hostility and territorial disputes.
 
So, from now on, in the Asia-Pacific region, the two largest economies, accounting for about 20% of US imports and 12% of exports, are acting as one against Washington. It is unlikely that in the new year Trump will find it easier to fight for an improvement in the trade balance.
 
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