Tariffs and Protectionism go hand in hand
President Trump is supposedly an “actions over deeds kinda guy” yet his words on tariffs and protection of U.S. industry seem to be having the desired effect on the dollar.
In a globalized world, “Joe Public” wants to be able to buy what he wants whether he lives in Chicago, Milan, Buenos Aires or Kuala Lumpur. Politicians invoking any kind of false patriotism towards, say, the make and or model of the car he drives no longer has any bearing so President Trump introducing tariffs on U.S. imports mostly to further his own aims could backfire disastrously. Artificial price increases on imported goods and raw materials will simply drive a wedge between the U.S. and the rest of the world and the dollar has already reacted negatively, although that is possibly the intention of the whole charade.
Now is possibly not the time to be starting s trade war with China given that Beijing has the power to “turn off the spigot” of funding for America’s burgeoning budget deficit.
Trade wars and protectionism have never ended well and in today’s interconnected world the biggest of big pictures needs to be considered. Of course, manufacturing jobs have been exported and cheap labour not raw materials have been the number one reason. That isn’t going to change. Ever. The U.S. worker demands a standard of living that his Chinese, Japanese or Taiwanese equivalent simply has no desire or need for.
Brexit hardening almost daily.
The blatant politicization of the Brexit agenda by the UK opposition this week hardly added to the expectation of a “soft Brexit” where Theresa May can “have her cake and eat it”. Michel Barnier and Donald Tusk were correct in saying that the UK is gradually closing every door upon itself.
Membership or otherwise of the customs union and the single market simply won’t happen under the present Government and that will mean that there will be stalemate over the Irish Border question.
The days of “cherry picking” have long passed now and the Eu is going to be less than generous towards any future negotiations Michel Barnier adopts his “the UK voted for Brexit now must bear the consequences” stance.
The “five tests” that Theresa may introduced last week make the UK a purely reactionary partner to any negotiations Before anything can be “tested” it will have to be proposed and as such the EU now has the upper hand in what will be discussed.
Sterling faces a possibly more difficult spring than it faced winter and the reasons to buy the pound are receding almost hourly.
A Cold Blast from Rome.
If last week saw record low temperatures in Brussels what can be expected to be seen coming from Rome following the election will be no warmer.
It seems that Italians are moving away from support for the EU as they are steered in that direction by politicians’ keen to pin the reason for all that ails them on external influences.
It seems that the populist Five Star movement founded by a stand-up comic is set to receive a larger share of the vote that the more centrist Forza Italia headed by veteran Silvio Berlusconi.
Five Star appear to have overtaken Forza Italia as the Italian voters move to the right and rebel against what they see as the undue influence over the Italian economy exerted by Brussels.
Depending upon the makeup of any coalition or the will of the President, there could be a seriously anti-EU Government what will be the third largest economy in the bloc following Brexit.
Five Star and Forza Italia form an uneasy alliance which is expected to win about 37% of the overall vote and will rely upon smaller, possibly more radical parties to enable them to create a Government.