In 2016, the Obama administration imposed duties on Chinese steel of more than 500%.

Yesterday the EU extended its anti-dumping duties on Chinese steel of between 48.3% and 71.9% depending on the company. Of the EU’s 53 steel anti-trade measures, half are directed at China.

President Trump proposed a 25% tariff on steel imports, due to be implemented this week.

The Financial Times reports that the EU’s own experts have advised their leaders that Trump’s measures are legal under WTO rules, while the planned EU response to target US companies in Republican states, such as Harley Davidson, is probably not.

Now, let me ask you, which of the three is being heavily criticised in the media? Which of the three is accused of triggering a trade war? Which of the three is blamed for the escalation in tensions? Which of the three is breaching trade rules?


How on earth have they singled out his legal, small and concurrent introduction of steel tariffs when others have done more, at the same time, and are considering illegal measures in retaliation?

Reading the news about Obama’s tariffs from 2016 is hilarious compared to today’s coverage of Trump’s proposals. The media’s deep hatred of Trump is exposed for all to see.

And it’s unsurprisingly difficult to find any news mentions whatsoever of the EU’s steel tariffs against China amongst the ranting and raving about Trump. They’ve hidden it well, thanks to the obvious irony for anyone reading it.

I’ve previously mentioned Trump’s extraordinary ability to get the last laugh and trap his detractors. This is a prime example. Trump’s steel tariffs come into action just when the EU renews its own. Coincidence? I doubt it.

Once the alt-media and Trump supporters cotton on, the fracas will be beautiful.

Not only that, but Trump found a way to implement the steel tariffs legally while goading other nations to retaliate in the hope they’ll do so illegally. That’s working out well too. The WTO will have to side with Trump!

All this is a rerun of the solar power story. Trump gets lambasted for the same policy implemented by Obama, who was either lauded or criticised for not doing enough.

The hypocrisy and Trump=hatred view of the media and establishment is destroying its own credibility. If only it wasn’t Trump who’s gaining power and credibility as a result.

Italy’s election changes Brexit

The financial finance fallout from the Italian election has been small. But the political fallout for the EU is going to be fascinating.

The default risk on Italian bonds is at a six-month low. Italian government debt sold off slightly, but yields are still extraordinarily low. And the gap between German and Italian bonds ended up where it started. Italian banks sold off as much as 7%, but their overall index was down about 2%.

Not much to see here.

The potential for trouble lies in the makeup of the coalition set to govern Italy. The left and the right parties have anti-euro views at their core. The centre left and centre right less so. The potential coalitions crisscross every which way, which means the extreme left and right may in fact form a government.

Whatever the coalition, all major parties agreed Italy’s relationship with the EU will need to change. They’ve suggested all sorts of ways how. And they’re threatening to leave the euro if they don’t get their way. Unlike in Greece, such threats may actually work.

Which is why the Brexit opinions of Italy’s new leading politicians may matter. We may have an ally in the south. Italy’s potential Prime Minister Salvini and his party economics chief have already hinted at it:

“You made a free choice with Brexit and I very much hope that it will be possible to maintain completely open trade with the EU without any penalties.”

“There will be no blind trust in what Germany wants. Punishment or anything of the kind would be sheer stupidity. We export more to the UK than we import back and we certainly don’t want to hurt our own client.”

On the far left, the leader agreed too: “We shouldn’t try to punish the British people for choosing Brexit.”

All this begs a question which has baffled me since negotiations began. What does the EU want from the Brexit negotiations? What are its goals? What does it stand to gain, or want to avoid losing?

Because I can’t identify any answers that are respectable. Punishing Britain, deterring others from leaving the EU, protectionism from British competition…

I just can’t find any decent reasons why Brexit isn’t a collaborative and mutually beneficial negotiation that optimises trade. Instead it’s presented as some sort of zero sum game where one side’s loss is the other side’s gain.

The key question, if you take on that warped worldview, is whether no deal is better than a bad deal. Greece’s Yanis Varoufakis found out the hard way what happens when you can’t walk away from a negotiation with the EU.

Prime Minister Theresa May should be working just as hard on the no-deal package as the deal package. And deciding between the two is a question which should be taken to parliament or the people. Not a choice between Brexit and no Brexit, but which Brexit? With the terms and conditions specified.

Instead we have utterly pathetic spats breaking out. Such as the Irish border story and whether financial services are included in the free trade agreement.

In December last year, the EU’s lead negotiator Barnier explained that financial services would not be part of any trade agreement with Britain: “There is no place [for financial services]. […] There is not a single trade agreement that is open to financial services. It doesn’t exist.”

Unfortunately, May sees otherwise. She wants to “include financial services in our economic partnership” given “the EU has included financial services, to varying degrees, in quite a number of the trade agreements that they have already established with other countries.”

Get a grip, people!

Until next time,

Nick Hubble
Capital & Conflict