The idea of boycotting US-made goods seems like the working title of a Twilight Zone episode but with the ‘every man for themselves’ narrative now the headline, the silver lining is worth consideration.
No matter what happens in American politics, every headline, segment, and push notification bends back to Donald Trump, his legal woes, or the latest political circus surrounding his allies.
There is no doubt this impacts investor confidence but an assertive, united and purposeful European bloc that has since emerged to tackle the Ukraine challenge is a clear positive for the world and indeed the defence sector on the contitent.
Reuters reported ‘the EU’s spending boost has sent European aerospace and defence stocks including Germany’s Rheinmetall (RHMG.DE) and Italy’s Leonardo (LDOF.MI) to record highs along with the Europe Aerospace and Defense Index – and left investors without exposure ruing missed opportunities.’
For every action, there is a reaction noting amidst all the machinations of geopolitical posturing the real economy looms.
Structural challenges notably growth in government debt piles needs to be reined in and the trade relationships seemingly redrawn overnight may yet provide an opportunity that has been previously crowded out by the Americans.
In pop culture parlance, the U.S. are ‘cancelling those who don’t agree with them’ and at its most primal, a schoolyard paradigm of “I’m not going to play with you anymore.”
Australia can relate as it was cancelled by China in 2021 after then Prime Minister, Scott Morrison said there should be a complete, open and transparent inquiry into the origins of Covid.
China, somewhat rather sensitive to the idea of transparency and accountability, quickly implemented a series of tariffs and import bans on everything ranging from wine, coal, and lobsters following the terrible insult of being asked how Covid started?
Still for the poor old Lobster, the war waged on aquatic arthropods made little sense as Australian exporters managed to open new markets.
The then Labor opposition were apoplectic in regard to the ‘damage done to the China trade relationship.’
Still, China’s throwing of ‘toys out of the cot’ has of course been eclipsed by the Trump Trade Temper Tantrum where the justification for such actions are explained by the crazed ramblings of U.S. Commerce Secretary, Howard Lutnick and presidential trade advisor, Peter Navarro.
Mr Navarro who would not be out of place in a Minions movie has proffered the view that Australia dumps aluminium on global markets and is killing the U.S. market.
The deluded Navarro position, enthusiastically backed by Mr Lutnick was the entrée into a Fox Business interview that quickly morphed into a facts-free-zone where Lutnick took aim at those dumpers!
“We’re not going to stand for China dumping, Japan dumping, Australia does a lot of aluminium at below cost. I mean, this has got to end, and the president is on it, and he’s protecting America.”
For Mr Lutnick and Mr Navarro, the pesky facts resemble a storm that would sit nicely in a teacup.
The value of aluminium ores exported from Australia last year were $12.9 billion whose customers were in North Asia, and the Middle East with the United States accounting for $60 million of sales out of $12.9 billion based on Australian Bureau of Statistics data.
Actual aluminium product out of Australia sold into the U.S. market was $386 million.
However, for the now Labor Prime Minister, Anthony Albanese has had to face criticism from the opposition Coalition parties around the damage done to the U.S. trade relationship!
And politicians ask why voters are cynical?
The United States has a trade surplus with Australia and uncomfortably for the Trump administration, a free-trade agreement it has now chosen to ignore.
So, what now?
Canadian patriotism is playing out in supermarkets and bars where American products are being removed, European and Asian countries have flagged a more selective approach on industrial products such as aircraft for example where commerce is frictionless.
Culturally, the question begs for the likes of Amazon, Netflix and even McDonalds where brand America outside the U.S. has been tarnished.
While cancelling America is possibly a stretch, there is no doubt that impacts of own goals have created uncertainty noting that in some cases there is a clear positive if European resolve around Ukraine is anything to go by.
For investors crowing about the second coming of Mr Trump, the Dow Jones has given up all the gains made in stocks since November where buyers regret may yet be the theme for the next 12 months.
One can only wonder what another cup of Joe (Biden) would have been like for the United States in light of the bitter taste of protectionism many countries simply can’t stomach.
