Analysis Tracking USA VS China Trade war

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Trump seeking tariffs on $60 bln Chinese goods, targets tech, telecoms | Latest News & Updates at Daily News & Analysis

The administration of President Donald Trump is seeking to impose tariffs on $60 billion of Chinese imports and will target the technology and telecommunications sectors, a source who had discussed the issue with the White House said on Tuesday.

Politico reported earlier that Trump had rejected proposals for tariffs on $30 billion of Chinese imports.

The source said that the tariffs would not be limited to technology and telecommunications equipment.

China runs a $375 billion trade surplus with the United States and when President Xi Xinping's top economic adviser visited Washington recently, the administration pressed him to come up with a way of reducing that number.

Trump came to office on a protectionist agenda and his first action as president was to pull the United States out of the 14-nation Pacific trade pact, known as the Trans-Pacific Partnership (TPP).

He has started talks to renegotiate the North American Free Trade Agreement (NAFTA) and most recently imposed tariffs on steel and aluminum imports.

While the tariffs on steel and aluminum, announced last week by Trump, are viewed as relatively insignificant in terms of imports and exports, moves to target China directly risk a direct and harsh response from Beijing.
 

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China shrinks steel industry slowly, drawing Western ire

China’s steel mills, a target of President Donald Trump’s ire, are the industry’s 800-pound gorilla: They supply half of the world’s output, so their every move has a global impact.

The steel industry swelled over the past decade to support a history-making Chinese construction boom. Once that tailed off, the country was left with a glut of half-idle, money-losing mills.

Beijing has closed some mills and eliminated 1 million jobs but is moving too gradually to defuse American and European anger at a flood of low-cost exports that is double the volume of second-place Japan.

Trump responded last week with a blanket tariff hike on steel and aluminum, another metal China’s trading partners complain it oversupplies.

Chinese authorities say they shut down 30 million tons of steel production capacity last year. That cut alone is equal in size to the annual output of the No. 9 producer, Brazil, but only a sliver of China’s 800 million tons.

Beijing’s goal is to make its industry more efficient and profitable, not just smaller. So while some mills close, bigger rivals step up production and could become even more formidable global competitors.

Total steel production rose 5.7 percent last year over 2016 to a record 831 million tons, according to the Chinese Cabinet’s planning agency, the National Reform and Development Commission. That was on top of a 1.2 percent increase in 2016 and more than seven times Japan’s output.

The industry is forecasting another 1 percent rise this year.

“Without the capacity cutting, there would have been much more production than there is now,” said Wang Suzhen, an analyst for Mysteel, a news service that follows the Chinese industry.

Steel and heavy industry have long been a political touchstone for Chinese leaders, which led to economic disaster in the 1950s.

In 1958, then-leader Mao Zedong encouraged the public to produce steel in backyard furnaces for his Great Leap Forward, a short-lived attempt at overnight industrialization.

Villagers stripped hillsides for fuel and burned doors and furniture to melt pots and pans and whatever other metal they could find to produce useless pig iron. The diversion of resources into the Great Leap led to famine that killed tens of millions of people.

In the past two decades, production took off as Chinese cities were bulldozed and rebuilt with thousands of new office and apartment towers, shopping malls, bridges and expressways. Output rose from under 130 million tons in 2000 to more than 600 million in 2010.

China’s voracious appetite for iron ore helped to drive economic booms in Australia, Brazil and other supplier countries. Mills bought Western and Japanese smelter technology.

Steel and aluminum, along with coal, glass and solar panels, are among many Chinese industries that mushroomed until supply vastly outstripped demand.

Once the building boom cooled, suppliers left with vast stockpiles of unsold goods resorted to price-cutting wars that threatened many with bankruptcy.

Beijing has announced plans to shrink steel and coal but has yet to outline plans for others.

China’s aluminum output is a fraction of steel’s size at about 36 million tons last year. But foreign competitors say the impact of low-cost Chinese exports on their industry has been even more devastating.

Last year’s steel exports fell 30 percent from 2016 to 63 million tons, but that still was one-quarter of the global total and more than twice Japan’s 30 million tons.

Beijing tried to defuse threats of trade sanctions by agreeing at a meeting of the Group of 20 major economies in 2016 to form a global panel to discuss how to shrink the industry. But it avoided any binding commitments.

In the US market, sales of Chinese steel have plunged due to earlier tariffs of up to 522 percent imposed on some products to offset what Washington says are improper subsidies to producers.

That means that while Trump has singled out China for criticism, his latest tariff hike is likely to hit US allies Japan and South Korea harder.

The United States bought just 1.1 percent of China’s steel exports last year compared with 12 percent for South Korea and 5 percent for Japan, according to the US International Trade Commission.

Steadily rising Chinese production increases pressure for mills to export, putting downward pressure on prices and undercutting exports from US, European, Japanese and South Korean mills.

At the same time, Beijing is merging its biggest steelmakers into even bigger, more efficient competitors.

China created the world’s second-largest steelmaker after Europe’s ArcelorMittal with the 2016 merger of two state-owned producers, Baosteel Group and Wuhan Iron & Steel.

The merged company, Baowu Steel, wants to increase production capacity by two-thirds to 100 million tons by acquiring smaller mills, the company general manager told the official China News Service in September.
 

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WASHINGTON (Sputnik) - The aides of US President Donald Trump are preparing a tough $30 billion tariffs package on Chinese goods imports, media reported citing sources in the presidential administration.

According to the Politico media outlet, the tariffs package was presented by US Trade Representative Robert Lighthizer as a response to alleged intellectual property theft by China. After the meeting, Trump reportedly demanded his aide to target bigger numbers and instructed the presidential administration to get prepared for the official announcement in the coming weeks.

The new trade package may affect imports of more than 100 various Chinese products, although some details, as well as the timing of the announcement of new tariffs could be changed, the media outlet added.

On Thursday, Trump signed an order that imposes 25 percent tariffs on steel imports and 10 percent duties on aluminum imports. The action will go into effect in 15 days. His announcement was met with condemnation from Washington's major trade partners, particularly Canada, China and the European Union, which accused Trump of excessive protectionism and pledged to impose countermeasures.
In August, the US president signed a memorandum ordering Lighthizer to investigate China’s trade policies, including the alleged $600 million theft of US intellectual property rights annually, under Section 301 of the 1974 US Trade Act, which allows Washington to take unilateral action against foreign governments that violate international trade agreements or damage US trade interests. China denies the claims.

White House Prepares Tough Import Restrictions Against China - Reports
 
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@Nilgiri @suryakiran @Pundrick @Ashwin @Aashish @nair @Arvind @Levina @Sumanta @dray @Milspec And @All

Is there a possiblity of USA VS china trade war or its just some hot air being blown to get some concession from China. What are possible scenarios if it really breaks out ?
If Trump admin goes for tariffs then they can't target particularly China, as that is against WTO rules. As above articles mentions SK & Japan will be affected the most if USA puts tariff on steel, it won't have much effect on Indian export of steels as Vietnam, Italy, Nepal & UAE are our main markets and we hardly export 2-4 lakh Metric ton to USA.

Even if USA puts duties on electronic equipment then we all know it will have major impact on China, SK, Taiwan & Japan, we are not even a small player in this segment. Our only concern is IT & IT enabled services where they might just put some restriction on requirement on skilled labours, which they have already put. It will have some impact on Indian IT companies as many of them send low-skilled software engineer to control their expenditure.

So not only Chinese lobby will block such move but the pro-nationalist will also go against moves which will impact ties with SK, EU & Japan.

Honestly I don't have any problem if they put stringent condition for H1B visa, as more Indians will be able to make it easily as high skilled worker rather than Mexico, China & Pakistan.
 
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dray

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@Nilgiri @suryakiran @Pundrick @Ashwin @Aashish @nair @Arvind @Levina @Sumanta @dray @Milspec And @All

Is there a possiblity of USA VS china trade war or its just some hot air being blown to get some concession from China. What are possible scenarios if it really breaks out ?
Americans are not super-liberals or shy (unlike India) when it comes to protecting their national interest, anyone challenging American supremecy is bound to face retaliation, they would simply invade the smaller countries, or create a political unrest or coup, or squeeze them with prolonged economic war. For countries of the size of Russia or China, political unrest and economic war are the options. In fact I wonder why America gave such a long rope to China for so long...! Was it part of their plan to counter Russia, or if Barak Obama was too lib and too soft a leader for America, that I am not sure...But with China coming up as the primary challenger of American world order, most likely with Russia as a reluctant partner; we are bound to see a new phase of cold war in the near future.
 

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@Nilgiri @suryakiran @Pundrick @Ashwin @Aashish @nair @Arvind @Levina @Sumanta @dray @Milspec And @All

Is there a possiblity of USA VS china trade war or its just some hot air being blown to get some concession from China. What are possible scenarios if it really breaks out ?
I doubt anyone will kick up a fuss about this one (steel, AL) on the ground given the low level of job creation to capex requirement ratio....especially at the levels proposed.

It will happen if the US moves from targeting beyond raw material inputs and proxies like base metals.....to targeting actual MVA products like manufactures and electronics etc (where the highest job creation/retention to capex deployment ratios are). China will retaliate of course, but it won't be very successful given a) the sheer level of the trade deficit b) US treasury printing authority, the same currency China holds trillions of dollars of bonds in c) Existence of NAFTA to route and encourage export subsititution with friendlier countries (that also economically compete with China). Trump is pretty right a trade war is inherently stacked towards the current "loser" in scenario winning....given the deficit becomes the leverage.

It is a coin flip at this point as I feel Trump admin is still testing waters (using steel+AL as trial case) and how they get the swing votes in rust belt on the back of it in midterms....PA-18 election does not look promising but it might be too early and may be too small scale.

If it all turns out pretty successful politically and to 2nd degree economically....there will definitely be a follow up. This year will be the crucial one I feel.
 
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Fear of rising China: Broadcom deal killed in unprecedented move by US

US President Donald Trump on Tuesday blocked a proposed deal for Singapore-based Broadcom to acquire US telecoms equipment maker Qualcomm. The move was striking for a number of reasons, including the fact that the entities had yet to agree to a deal in the first place, and that Broadcom was in the process of relocating its headquarters to the United States.
Such an agressive action to block an acquisition was unprecedented, as deals are usually reviewed later in the process if national security concerns arise. This particular case underscores just how worried the United States is about Chinese telecoms giant Huawei.
Some analysts credited the move to block the takeover with dragging the tech sector down in trading on Tuesday. The S&P 500 technology sector shed more than 1%.
On the mysterious Huawei connection, from Bloomberg:
What role did Huawei have in the Broadcom/Qualcomm deal?
None. Huawei — never an aggressive acquirer — had no direct role in the deal negotiations. But it loomed over the talks because of its growing influence.
So why the worry about Huawei?
CFIUS is concerned that Broadcom would cut back on R&D funding at Qualcomm, strengthening Huawei at a time when rivals from Ericsson to Nokia are grappling with weak telecoms spending. That theoretically gives Chinese companies such as Huawei and closest rival ZTE Corp. the upper hand in steering the direction of wireless communications development, thereby — so the argument goes — jeopardizing U.S. national security. CFIUS’s concerns over the deal are said also to stem from Broadcom’s ties to Huawei, which was blacklisted in 2012 along with ZTE when the U.S. House Intelligence Committee cited security risks posed by the companies.
The Broadcom-Qualcomm deal wasn’t even a Chinese takeover, but attracted intense scrutiny from Washington out of a fear of China’s rising influence in the tech sector. Chinese automaker Geely’s surprise move to become Daimler’s largest shareholder has apparently been setting off alarm bells in Berlin as well.
“What’s disturbing is the way Geely just crept up on Daimler out of nowhere,” MP Kerstin Andreae, the Greens’ expert on economic policy was quoted by The Financial Times as saying. “One fine day Daimler’s CEO [Dieter Zetsche] woke up to find he had a new principal shareholder, and that’s a huge change in the company’s ownership structure.”
“The fear is that the state is somehow behind this deal, that geopolitical as well as economic interests are tied up in it,” a senior German official was quoted as saying.
Geely chairman Li Shufu didn’t help his case among Germans when he said, speaking on a Chinese television broadcast that the investment was designed to “support the growth of the Chinese auto industry” and “serve our national strategies.”
“You increasingly have the feeling that Germany and China are moving from being partners, to rivals, to adversaries,” says Dirk Schmidt, an expert on Chinese foreign policy at the University of Trier. “The change in mood is astonishing, considering how quickly it’s happened.”
 

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U.S. expected to impose up to $60 billion in China tariffs by Friday: sources

WASHINGTON (Reuters) - The Trump administration is expected to unveil up to $60 billion in new tariffs on Chinese imports by Friday, targeting technology, telecommunications and intellectual property, two officials briefed on the matter said Monday.

One business source, who has discussed the issue with the administration, said that the China tariffs may be subject to a public comment period, which would delay their effective date and allow industry groups and companies to lodge objections.

This would be considerably different from the quick implementation of the steel and aluminum tariffs, which are set to go into effect on March 23, just 15 days after President Donald Trump signed the proclamations.

A delayed approach could allow time for negotiations with Beijing to try to resolve trade issues related to the administration’s “Section 301” probe into China’s intellectual property practices before tariffs take effect.

The White House declined to comment Monday. China has vowed to take retaliatory measures in response.

Shipping containers are seen at Nansha terminal of Guangzhou port, in Guangdong province, China June 14, 2017. Picture taken June 14, 2017. REUTERS/Stringer

Reuters first reported on the $60 billion in tariffs last week.

A source who had direct knowledge of the administration’s thinking told Reuters last week that the tariffs, authorized under the 1974 U.S. Trade Act, would be chiefly targeted at information technology, consumer electronics and telecoms and other products benefiting from U.S. intellectual property. But they could be much broader and hit consumer products such as clothing and footwear, with a list eventually running to 100 products, this person said.

FILE PHOTO - A U.S. flag is tweaked ahead of a news conference at the Ministry of Foreign Affairs in Beijing, Wednesday, Jan. 27, 2016. REUTERS/Jacquelyn Martin/Pool

China runs a $375 billion trade surplus with the United States and when President Xi Jinping’s top economic adviser visited Washington recently, the administration pressed him to come up with a way of reducing that number.

In January, Trump told Reuters he was considering a big “fine” as part of a probe into China’s alleged theft of intellectual property. Trump said the Chinese government had forced U.S. companies to transfer their intellectual property to China as a cost of doing business there.

Expectations of the anti-China tariffs have alarmed dozens of U.S. business groups, who warned on Sunday they would raise prices for consumers, kill jobs and drive down financial markets.
 

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China is ready for a trade war with the US — and it could hurt Americans
  • The Chinese are prepared for a trade war with the U.S., and the cost of that to Americans and American firms should be considered, said an expert on U.S.-China relations.
  • "One should be cautious before we say this is a one-way street," Robert Ross, a professor of political science at Boston College, said of the U.S.-China relationship.
  • Furthermore, if China becomes a trade adversary, it does not portend well for any U.S. talks with North Korea on denuclearization, he said.

China is prepared for a trade war, expert says 2:17 AM ET Thu, 15 March 2018 | 02:56
China is prepared for a trade war with the United States, but the U.S should consider the costs of starting one, an expert on U.S.-China relations said Thursday.

Robert Ross, a professor of political science at Boston College, told CNBC: "The Chinese have made it clear: 'You want a trade war? We're prepared.' And they are. Because of course they have a very large market and a very robust economy."

In fact, nationalistic state media outlet Global Times said in a Wednesday op-ed that China should be ready for a "looming trade war."

"Beijing needs to give Washington head-on blows in a similar manner and must not be soft," the op-ed said.

It's worth considering the possible fallout for Americans and U.S. companies operating in China, if there is a trade war, he said.

"We should remember two things. One, Chinese exports to the United States improve the American standard of living by selling less expensive goods to United States that we benefit from — and we don't make those goods anymore."

"Second, there are an awful lot of American companies that are making large sums of profits inside China, whether it's Apple, whether it's Buick, whether it's other American companies," he told CNBC's "The Rundown."

"One should be cautious before we say this is a one-way street," Ross said of the economic relationship between the U.S. and China.

Reports on Tuesday said President Donald Trump's administration is considering a trade package including tariffs on $60 billion worth of Chinese goods, which may target the tech and telecommunications sectors — among others — in China.

Ross also pointed out that the trade deficit with China — at a record $276 billion last year — is a result primarily of economic factors instead of policy issues.

"The Chinese have a very high savings rate, the Americans have a very low savings rate. We consume more than they do, we're going to have a trade deficit. Now, do you fix that through policy? Do you fix that through trade wars? Highly highly debatable."

Larry Kudlow, who Trump has tapped to be his new chief economic advisor, also had harsh words for Beijing on Wednesday, calling for a "coalition of large trading partners and allies against China."

But Ross said such a coalition was unlikely.

"The Europeans are constantly tripping over each other to get advantages in China. And to think they would fall behind the United States and impose sanctions that would put at risk their own economic growth — I don't think that's probable at all."

Furthermore, if China becomes a trade adversary, it does not portend well for any U.S. talks with North Korea on denuclearization, he said.

"It becomes a lot more difficult to ask for Chinese cooperation on something we care about when we are treating them like a trade adversary," Ross said, predicting that Chinese cooperation and interest in the North Korea problem would diminish.
 
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BMD

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Oh, I don't know. I've been saying this should happen for years.
 

Shashank

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China hits back at Donald Trump's tariffs as trade war finally arrives

China said it doesn’t fear a trade war with the US and announced plans for reciprocal tariffs on $3 billion of imports from the US in the first response to President Donald Trump’s ordering of levies on Chinese metal exports.

China plans tariffs on imports of US pork imports, recycled aluminum, steel pipes, fruit and wine, according to a Commerce Ministry statement on Friday. China will also pursue legal action against the US at the World Trade Organization in response to the US planned tariffs on steel and aluminum imports, the statement said, and called for dialog to resolve the dispute.

The announcement came hours after Trump instructed US Trade Representative Robert Lighthizer to slap tariffs on at least $50 billion in Chinese imports. That was in addition to the metals duties ordered earlier this month on China and other countries. The news sent US equities tumbling, with the Dow Jones Industrial Average falling 724 points, almost 3 percent, its biggest drop in six weeks. All major indexes in Asia also fell on Friday.

“The US declared a trade war, but China is acting quite restrained. The list that China has announced appears to be a retaliation, but still it is very measured," said Li Yong, senior fellow of China Association of International Trade. "The move sends a message that China is able to fight back, but we still want a trade peace instead of a trade war."


The US will impose 25 percent duties on targeted Chinese products to compensate for the harm caused to the American economy from China’s policies, according to a fact sheet released by USTR. The proposed product list will include items in aerospace, information and communication technology and machinery. The USTR will announce the proposed list in the next “several days,” according to the fact sheet.


“This has been long in the making,” Trump said, adding that the tariffs could affect as much as $60 billion in goods. “We have a tremendous intellectual property theft situation going on” with China affecting hundreds of billions of dollars in trade each year, he said.

As he signed the tariffs order, Trump told reporters, “This is the first of many.”

"This is an opening gambit by China, signaling that the imposition of tariffs by the US will elicit what Beijing views as a proportionate retaliatory response," said Eswar Prasad, a former chief of the International Monetary Fund’s China division and now a professor at Cornell University in Ithaca, New York. "China has the ability to inflict significant economic harm on US exporters of certain goods and can also use other overt as well as covert actions such as supply chain disruptions to hurt U ..
What Our Economists Say... “President Donald Trump’s announcement of tariffs on $50 billion in Chinese goods markedly ratchets up the trade tensions,” Bloomberg economist Tom Orlik wrote in a note. “Even so, it remains way short of his campaign pledges and -- at a maximum -- will shave a fraction of a percent off Chinese GDP over a number of years.”
Policy makers across the world are warning of a brewing trade war that could undermine the broadest global recovery in years. Meanwhile, busines ..

Read more at:
//economictimes.indiatimes.com/articleshow/63423674.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
 

BlackOpsIndia

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China hits back at Donald Trump's tariffs as trade war finally arrives

China said it doesn’t fear a trade war with the US and announced plans for reciprocal tariffs on $3 billion of imports from the US in the first response to President Donald Trump’s ordering of levies on Chinese metal exports.

China plans tariffs on imports of US pork imports, recycled aluminum, steel pipes, fruit and wine, according to a Commerce Ministry statement on Friday. China will also pursue legal action against the US at the World Trade Organization in response to the US planned tariffs on steel and aluminum imports, the statement said, and called for dialog to resolve the dispute.

The announcement came hours after Trump instructed US Trade Representative Robert Lighthizer to slap tariffs on at least $50 billion in Chinese imports. That was in addition to the metals duties ordered earlier this month on China and other countries. The news sent US equities tumbling, with the Dow Jones Industrial Average falling 724 points, almost 3 percent, its biggest drop in six weeks. All major indexes in Asia also fell on Friday.

“The US declared a trade war, but China is acting quite restrained. The list that China has announced appears to be a retaliation, but still it is very measured," said Li Yong, senior fellow of China Association of International Trade. "The move sends a message that China is able to fight back, but we still want a trade peace instead of a trade war."


The US will impose 25 percent duties on targeted Chinese products to compensate for the harm caused to the American economy from China’s policies, according to a fact sheet released by USTR. The proposed product list will include items in aerospace, information and communication technology and machinery. The USTR will announce the proposed list in the next “several days,” according to the fact sheet.


“This has been long in the making,” Trump said, adding that the tariffs could affect as much as $60 billion in goods. “We have a tremendous intellectual property theft situation going on” with China affecting hundreds of billions of dollars in trade each year, he said.

As he signed the tariffs order, Trump told reporters, “This is the first of many.”

"This is an opening gambit by China, signaling that the imposition of tariffs by the US will elicit what Beijing views as a proportionate retaliatory response," said Eswar Prasad, a former chief of the International Monetary Fund’s China division and now a professor at Cornell University in Ithaca, New York. "China has the ability to inflict significant economic harm on US exporters of certain goods and can also use other overt as well as covert actions such as supply chain disruptions to hurt U ..
What Our Economists Say... “President Donald Trump’s announcement of tariffs on $50 billion in Chinese goods markedly ratchets up the trade tensions,” Bloomberg economist Tom Orlik wrote in a note. “Even so, it remains way short of his campaign pledges and -- at a maximum -- will shave a fraction of a percent off Chinese GDP over a number of years.”
Policy makers across the world are warning of a brewing trade war that could undermine the broadest global recovery in years. Meanwhile, busines ..

Read more at:
//economictimes.indiatimes.com/articleshow/63423674.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Wow, probably the first time Trump is not accommodated but confronted.


Bring out the pop corn, this is going to be exciting :cool:;)
 

Bali78

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I would have preferred this war after 5 years. India could have gained a lot from this war. But right now we are not ready to grab manufacturing opportunities which might move out of China.

Plus the moment major companies starts migrating from China to India, chinese are going to increase the heat on our northern border and currently we are not ready for that.
 

BlackOpsIndia

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I would have preferred this war after 5 years. India could have gained a lot from this war. But right now we are not ready to grab manufacturing opportunities which might move out of China.

Plus the moment major companies starts migrating from China to India, chinese are going to increase the heat on our northern border and currently we are not ready for that.
It will not go that far, 100 bucks Trump will chicken out like when he was faced with Bernie Sanders.
 

Bali78

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It will not go that far, 100 bucks Trump will chicken out like when he was faced with Bernie Sanders.
I hope so. But this clown is an unpredictable one. Recently he blocked the Broadcom deal without much deliberation.
Salla woh bandar hey aur uske hath mein ustara thama diya hey 😤