Get Ready for a September of Trade Skirmishes
Date: Tuesday, September 3, 2019
So much for a relaxing August. Here’s where the world’s major trade disruptions stand as September begins with a full slate:
- The trade war abides. The U.S. and China are trying to restart talks. But with tariffs on more than $500 billion of shipments going both ways, questions remain about the scope of any discussions. Can President Donald Trump still land the big one where Beijing gets free-market religion and factory jobs come rushing home? Or will it be a smaller deal that gives Trump an election-year win and President Xi Jinping buys some American soybeans without losing face? Either way, tariffs as a tool of U.S. leverage and an interlocutor prone to tweeting his views are making China reluctant to negotiate.
- The next front may be Europe. Washington is poised to announce new tariffs on as much as $11 billion of goods to retaliate against prohibited European aid for Airbus. The European Union has a similar case pending against Boeing, and has prepared a $12 billion retaliatory plan. Trump is also expected to decide by mid-November whether to impose levies on auto exports, putting about $30 billion of European output at risk. And later this year, the World Trade Organization’s dispute-resolution process may be paralyzed due to an American hold on filling vacant seats.
- Brexit isn’t any clearer. Britain faces its third national ballot in just over four years after Prime Minister Boris Johnson said he would rather risk losing office than have his negotiations with the EU undermined. Johnson will try to trigger a snap election on Oct. 14 if he loses a crunch vote in Parliament on Tuesday evening. It’s the culmination of a face-off between the combative new leader, who argues that threatening to walk away from talks with the EU gives him leverage, and a majority of members of Parliament convinced that the U.K. crashing out of the bloc without any agreements on trade and other matters would cause vast economic harm.
And those are just the highlights. Japan and Korea continue to make trading more difficult between their export-heavy economies and French President Emmanuel Macron threatened to block the EU’s trade deal with the Mercosur countries.
Global trade will at best stagnate in 2019 as hopes of any China-U.S. trade war resolution appear to be waning. Optimism for a quick recovery and material trade volumes rebound is unlikely, according to Bloomberg Intelligence.