Finanze® Daily Digest - 20/09/2022

The Brief: Liz Truss made it transparent as she landed in New York for the UN General Assembly that no trade accord will be possible with the US until the medium term. The UK PM did not elaborate on the time frame, however, as she outlined the agenda of her meeting with Joe Biden on Wednesday, which will include global security related to the ongoing conflict between Ukraine and Russia. She also added that the country will focus instead on developing trade deals with India and seek membership in the Gulf Cooperation Council and accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Why It Matters: Former PM Boris Johnson was a staunch advocate of a US trade deal as part of Brexit until finally admitting that the US can make negotiations difficult and there’s no possibility of a trade deal until 2024. It must also be recalled that when she was Johnson’s Secretary of State for Trade, Truss pushed for the publication of free trade agreement documents that support developing trade negotiations with the US.

Finanze® Foresights: The US and UK may be allies in global trade liberalisation but the impact of Brexit has been evident so far with the steel and aluminium tariffs still in place, for instance. In their bilateral trade negotiations, some of the ongoing sources of disputes stem from retaliatory tariffs and possible privatisation of sectors that may lead to higher product costs. We share Truss’ outlook on stalling trade negotiations since the US government has been keen on leveraging trade policies for geopolitical strategies. However, the sooner that these issues are discussed, the more clarity it will provide for the UK economy currently facing labour shortages, a soaring inflation and supply chain-related disruptions.

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