Ok so what happens to the Dow while we wait for the other sides to fold?
And is it wise to start trade wars with your allies while sanctioning oil producers. The other countries will just sit back and watch us get squeezed between increasing gas prices and a decreasing stock market.
There’ll also be an inevitable slowdown in the construction industry.
Yes, I think a moderately prolongued trade spat is more likely to deflate the stock market/asset price soufflé, which has long been propped up by pixie dust and moonbeams, before the consumer economy really feels the pain. That wouldn't actually be the worst side effect, except that the debt-riddled workers whose wages have been stagnant for last forty years in order to keep it afloat will - by design - inevitably have to bail out the finance and real estate sectors again. They probably shouldn't have voted for Goldman Sachs in 2016.
Of course, given that we've been pulling full tilt on the pixie dust and moonbeam emergency lever ever since the last meltdown, there will be nothing monetary policy can do to help fix the next one. That's when world politics will really get fun.
The funny thing about the White House's Failed-Pentagon-Consipracy-War-Games-Plotters/Trump's-Senile-Brain-Spasms Combo is that the most immediate winners will be Russia, Venezuela, and Iran. Iran's ability to withstand sanctions goes up exponentially with every dollar rise in the price of oil; probably the only reason they agreed to the nuclear deal in the first place was to contain the fallout from Saudi retaliation against US fracking by spiking the price of oil.
