The Pagefield Review: 9th March, 2018

Friday 09th March

In a throwback to the cold war era, news this week has included a suspected state-sponsored assassination attempt in a Salisbury shopping centre and the spectre of a global trade war. Pagefield’s Ed Brown gives his take on the week that was.

Issue of the week – Trump ponders a trade war

Domestic news has understandably focused on the exposure of former Russian spy, Sergei Skripal, and his daughter, to a nerve agent on UK soil. But larger storms have been brewing overseas with the US President moving to impose a raft of trade tariffs.

The President took to twitter last week to announce that “trade wars are good”.  And on Thursday, Mr Trump signed a presidential proclamation imposing levies of 25% on steel products and 10% on aluminium. However, domestic and international pressure appears to have had some affect, and exemptions have been put in place for Mexico and Canada. This may now be extended on a case-by-case basis to “real friends”.

What has the reaction been:

The stock-markets reacted promptly to Mr Trump’s proposed tariffs with a global sell-off reflecting fears of a trade war. The President has faced significant domestic pressure too, with Gary Cohn, the President’s top economic adviser, resigning, and over 100 Republican House members signing a letter in protest.

Allies and competitors from around the world have also responded robustly. The EU trade commissioner used a speech to warn Mr Trump that tariffs on EU steel and aluminium would prompt retaliation. Potential targets for the EU include imposing tariffs on American products and brands including orange juice, Bourbon, and Levi Jeans. Beijing similarly threatened an “appropriate and necessary response”.

Looking forward, steel and aluminium producing countries now have a two-week window to make the case for an exemption from the new tariffs. For Britain, this would have to be negotiated as part of the EU bloc.

What does it mean for the UK:

Unless Trump backs down, the UK is likely to find itself in an uncomfortable position. Stuck with the EU for the meantime as it threatens retaliation, and unable to agree new trade agreements with America.

The imposition of tariffs would have a significant direct impact on the UK, making it harder to sell into its largest non-EU customer, as well as harming engineering companies such as Rolls-Royce and BAE Systems. More broadly, there is also the threat of it escalating into a global trade war, with potential dramatic economic consequences.

On a separate but related note:

It was also revealed this week that America is lobbying for the UK to drop geographical name protections after Brexit, opening the way for American copies of products such as Scotch whiskey, Cornish pasties, and Melton Mowbray pork pies.

Campaign watch – International Women’s Day

This Thursday was International Women’s Day. The day took on particular relevance this year in the wake of #MeToo.

Politicians took the opportunity to announce a raft of new proposals focused on gender-equality. Theresa May used op-eds in the Guardian and Sun to announce a new consultation on the government’s Domestic Violence Bill, while the Labour Party announced that it would fine employers who fail to close the gender pay-gap. With less than month to go until the deadline for organisations of more than 250 employees to publish their gender-pay gap data, you can expect to hear more about the latter policy in the coming days.

Meanwhile 200 business leaders and public figures  published a letter in The Telegraph calling for the government to do more to support female entrepreneurship in Britain.

The week ahead – Spring Statement

Don’t expect fireworks from the Chancellor’s Spring Statement next Tuesday, 13 March. True to his word, Philip Hammond is expected to forego the norm of essentially presenting a second budget, in favour of a paired back financial statement. Treasury has even circulated a memo to MPs telling them to expect no more than a 15 minute speech. Despite the slim pickings, the statement is rumoured to include tax consultations on a range of areas including digital companies.

Headline of the week

City A.M. “Hit the Chevy with a Levy, Tax Your Whiskey & Rye”

The week in a tweet

“We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the U.S. for many years. Our Steel and Aluminum industries are dead. Sorry, it’s time for a change! MAKE AMERICA GREAT AGAIN!” – Donald J. Trump

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