Happy Friday to you all. And what a superb Friday it is; the sun is shining, the birds are singing and George Benson is currently playing on the office radio – what can be better? Hopefully this week’s News, Views and Truths…
This week we return to the U S of A and our good friend Donald “D-Dog” Trump and the latest delivery of his Presidential promises. His focus on “Making America Great Again” is an economic one and he announced yesterday that he has signed orders imposing heavy tariffs on steel and aluminium. His rationale for this is that the US is suffering from “unfair trade”, with the vision that this move will boost US industry.
The tariffs themselves are 25% placed on steel and 10% on aluminium imported into the US. However, not all countries will have these applied to their exports; Canada and Mexico will be exempt from these, with the plan that they will go into effect in 15 days.
Globally, the reaction to these could be said to be less than positive. In the US itself, both sides of the House have made known their dismay at this course of action, with Republican Senator Jeff Flake stating that “trade wars are only ever lost”.
Realistically, China is the real target for the action, although in his own indomitable style, Don is going about things in his usual ham-fisted way as China is not even one of the top 10 sources of US steel imports.
However, maybe to his personal chagrin, these tariffs are likely to have only a modest impact; steel and aluminium account for only 2% of world trade. Secondly, the world has changed significantly from the 1930s which saw the last great trade war. Back then, the tit-for-tat protectionism triggered by the imposition of US trade tariffs helped deepen the post-great-depression slump. Today the global economy is growing at its fastest pace since the financial crisis of a decade ago.
Yet we are beginning to see retaliations. As the EU has apparently found their cajones after dealing with David Davies et al on the topic of Brexit, European Commissioner Cecilia Malmström has warned that trans-Atlantic relations could be damaged by the looming tariffs on steel and aluminium. To show how serious they are, she stated that a provisional list of US imports into the EU has been drawn up to which tariffs may be attached.
This includes peanut butter. The EU means serious business folks. Don’t mess.
Predictably, the markets, as the global barometer of sense, have reacted with a unified “meh!” to all of this. At the time of writing, the UK FTSE100 is at 7,200.25, up some 1.8% since the start of the week. The US S&P 500 is up 3% and the Japanese Nikkei 225 up around 2%. In a word, canny.
And finally… this week’s playlist is brought to you by the number 8, the letter K and our Marketing dudes, Thrive. Thrive designed and implemented our recent rebrand and assist us in our business planning; really nice folk and a firm we would have no hesitation in referring anyone to. Anyway, here is their (eclectic) playlist based upon no theme whatsoever. So have a listen and I will see you all next week.