“Trump signing executive orders…”

Trump signing execution orders

US

While, the US trade policy since 1934 has been geared towards liberalization and internationalization, a centerpiece of Trump’s campaign was the promise of greater economic opportunities for Amercian workers. He intends to cut taxes and increase spending in order to boost economic growth.

During his run to the White house he campaigned against the TPP and other trade deals.

In putting America First Donald Trump’s strategy is to impose tariffs on nations such as China and Mexico but also threatens to punish those US companies that invest outside the US creating jobs overseas, with tariffs on imports in the US. For now the North American Free Trade Agreement with Mexico and Canada has so far been untouched.

On Monday 23rd January, Trump signed an order withdrawing the US from Trans Pacific Partnership trade pact. The accord had been promoted by companies such as Nike Inc and Wal-Mart Stores Inc. The TPP is a deal signed by 12 countries with the aim of liberalizing trade between the US and Pacific Rim nations including Japan, Mexico and Singapore. It was part of Obama’s attempt to lead the US into a global strategy focusing on the fast growing economies of Asia. China is ready to step in and take up the vacuum created by the withdrawal of America. Also, the focus is directed towards other alternative partnerships such as RCEP which has almost half of the world population since it has China and India included whereas the TPP only has 11% of the population. However, in terms of nominal GDP TPP is largest as it has the US in it.

On Tuesday 24th January, president Trump met with chief executives of Ford Motor, Fiat Chrysler and General Motors and promised a more business friendly environment by offering to reduce environmental standards, regulations and taxes. The aim is for these companies to continue investing with the intention of creating more jobs in the US. These companies were also warned of onerous tariffs being implemented should manufacturers try to set up plants overseas and move outside the US seeking cheaper labour.

President Donald Trump also signed four executive orders. An executive order have the full force of law when they take authority from a legislative power and guide the operations of the federal government. President Trump signed three directives on Monday 23rd January, one of them as outlined above withdrawing US support for a Pacific trade deal, another imposing a hiring freeze in civilian agencies and lastly amending the Mexico city policy. The latter is a policy that prohibits US federal funding for non-governmental organisations that promote abortion.
The third order declared that pipelines had to be constructed with US steel and built in America. Ford cancelled a $1.6 billion assembly plant in Mexico and instead will spend $700 million to expand a factory in Michigan. GM and Fiat Chrysler have plans to invest $1 billion in an assembly in the US.

UK

In an 8-3 vote, the highest UK Court ruled that Theresa May had to seek an act of Parliament to trigger Article 50 of the Lisbon Treaty and start the 2 year countdown to Brexit. This is a defeat for Theresa May who alone had the power to withdraw from the EU. Moreover, there is the risk of not meeting the March 31 deadline to start the withdrawal talks.

In the fourth quarter of 2016, the UK economy increased by 0.6% which was mainly driven by services with construction and production not contributing to this growth.

In 2017 our focus will turn on the French presidential election towards April and May and then towards the end of summer at the German Federal election.

The upcoming events in February are:

01.02.2017 – US Federal Reserve Monetary Policy Meeting
02.02.2017 – Bank of England Monetary Policy Meeting.

Antonella Mercieca

Client Relationship Manager

Source:

Bloomberg

Date:

January 23rd, 2017


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