“War of Words” On Global Trade To Continue

Business, China, Company Strategy, Economics, US

S&P500

By John Richardson

WE remain in almost entirely uncharted territory despite the confidence of US stock markets.

Take as an example the communique released after this weekend’s G20 meeting where traditional language about the importance of open global markets was dropped in order to keep the US happy.

The wording of this joint statement was a response to the approach of Steven Mnuchin,  the US Treasury secretary. He told the gathering that American policy would follow the campaign promises made by President Trump to put “America first”. This involves reviewing existing trade deals.

Thursday is an important date in your calendar. It is then that the House is set to vote on the Trump administration’s replacement for Obamacare, although there could be a change of plan if it becomes clear that not enough Republicans will support the bill. If at least 22 Republicans say they will vote against Trumpcare or Ryancare – enough for a defeat at the House stage – then it could be back to the drawing board.

Even if the bill does pass the House this Thursday, or at any future date, some commentators are insisting it will be dead on arrival in the Senate, as it would only have to be rejected by two Republican Senators to fail.

As of yesterday, the numbers looked very challenging for the Trump team: 45 House members either planned to vote against the bill or had concerns about its format, with 20 Senators sharing the same positions.

What does tell is about the rest of 2017? Today, this seems the most likely scenario:

  • The “War of Words” over trade will continue. Different opinions within the White House will contribute to this war, as will of course the political establishment in other countries that is firmly on the side of the existing international trade order. Even if this war of words doesn’t result in significant new trade barriers by the end of this year, all of this nervousness and uncertainty has already negatively affected world trade. A February report from the World Bank said that uncertainty in economic policy was responsible for a 0.6 to 0.8 percentage point fall in the growth in trade between 2015 and 2016. There will be more of the same this year.
  • Either a.) Healthcare reform stalls, which will also mean no tax reform or major infrastructure spending in 2017 or b.) Healthcare goes through but the time and effort that it takes – along with the deep divisions over what shape tax reform should take – means no tax changes in 2017.  There will also be no time to get infrastructure spending done. This of course means that the expected boost to US economic growth won’t happen.

This blog post has not been about the rights or wrongs of what’s been attempted by the White House. That is a separate, highly complex debate – and I will attempt to present both sides of this discussion over the coming months.

What I have instead again emphasised is that we are an era of political and economic uncertainty that none of us have experienced before because of the radical nature of what is being attempted by President Trump and his team.

PREVIOUS POST

China Commodity SpeculationThreatens Price Correction

17/03/2017

By John Richardson A SMOKING gun that points to more market-distorting high leve...

Learn more
NEXT POST

The Trump Agenda: Boosting US Growth Will Not Be Straightforward

22/03/2017

By John Richardson DURING his election campaign Donald Trump painted an image of...

Learn more
More posts
Challenges facing China as it tries to bridge the rural-urban wealth divide
26/09/2021

By John Richardson THIS COULD be the biggest event in our industry since at least the Global Financi...

Read
What global petchems demand would have been like without the China property bubble warns us about the future
24/09/2021

By John Richardson PLAYING “What if?” games by changing the course of history is popular amongst...

Read
Whether Beijing blinks over Evergrande is the biggest issue for global petchems
22/09/2021

By John Richardson WILL BEIJING blink? The answer to this question could pretty much set the directi...

Read
The perils of Evergrande for China and world polyolefins demand
20/09/2021

By John Richardson ON THE PLUS side of the H2 China polyolefins demand ledger are the Golden Week Ho...

Read
China PP arbitrage to the US goes through the roof despite surging freight costs
15/09/2021

By John Richardson IT IS VERY HARD to see how we will get out of this container crisis anytime soon....

Read
Latest data show China could become PP net exporter by 2026 and net exporter of 3.7m tonnes in 2031
13/09/2021

By John Richardson DO YOU WANT the good news or bad news first? This is of course a rhetorical quest...

Read
China HDPE self-sufficiency risks increase as more new capacity is announced
09/09/2021

By John Richardson THE ABOVE chart on the  left might not happen, of course. China could remain a h...

Read
Asia and Middle East PP producers need to be more global because markets are more regional!
05/09/2021

By John Richardson NORTHEAST ASIAN (NEA) polypropylene (PP) producers are finding it increasingly di...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more