Dr. Rebecca Harding, CEO
The last week of February could be a defining week for global trade. In the US, Donald Trump has extended the deadline on the imposition of tariffs on Chinese goods. Meanwhile, in the UK, we could see the UK Parliament taking control of the Brexit process.
At the end of last week, the US President, Donald Trump, signalled his willingness to delay the process of imposing tariffs. There is no “magical date”, he tweeted, and, a couple of days later, suggested that he would meet President Xi of China “soon”. He is still under pressure over the wall with Mexico; he has to decide whether or not to implement proposed sanctions against Venezuela; he will need to look at whether or not the EU’s car sector poses a national security threat and act accordingly, and he has a Summit with President Kim on denuclearisation of the Korean Peninsula.
We could yet see the imposition of tariffs on $200bn of Chinese imports into the US after the March 1st deadline, but for a president who prefers to deal with one bi-lateral problem at a time, extending the deadline provides the both the US and China with a little breathing room.
Brexit is increasingly following a similar path. This was to be the week of the meaningful vote,but has been postponed until March 12th at the latest. While Theresa May might protest that she is not running down the clock to March 29th, this will certainly be how it is interpreted. On the face of it, the delay is to give time to “positive” discussions that the UK government is having with the EU. In reality it has the effect of diffusing the challenge from Yvette Cooper and Sir Oliver Letwin who want to take the prospect of no deal off the table and ask for an extension to the Article 50 process if no agreement on the Prime Minister’s deal has been reached by the 13th March.
These are uncertain times, and markets and businesses loathe uncertainty. It creates hype and misinformation; worst of all, it is inherently uninsurable. However, the fact that a full blown trade war globally would be catastrophic for the global economy seems to be guiding the thinking in Washington and Beijing. Similarly, there are said to be “dozens” of Conservative MPs who will vote against a no deal Brexit which would be a disaster for the UK’s international businesses and the UK’s households because of the longer term effects on prices and economic security. Against this backdrop, planning for business as usual may yet be the best option.
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