This week in trade has been dominated by US trade spats, as Canada retaliated against 50% tariffs imposed on its imports and China warned Washington not to let new sanctions on Iran impact Chinese firms.
There’s also reports that UK defence spending targets could be rowed back in the face of financial constraints ahead of October’s Autumn Budget, and poor export news for the UK’s car-manufacturing sector.
Big picture: The US and Canada look to be on collision course for a trade war. Following the breakdown of trade talks over the weekend, both US President Donald Trump and Canadian prime minister Mark Carney traded barbs and both governments unveiled their plan for imposing tariffs on imports from the other country.
On Monday, Global Trade Today reported that US officials were expecting to place 50% tariffs on US$20bn worth of Canada’s exports into the US.
On Wednesday (26 August), the Canadian finance ministry issued a 99-page document outlining hundreds of US goods that are set to be hit by up to 50% tariffs, including steel, dairy and parts used in manufacturing, as well as a package of targeted domestic support for affected Canadian industries. This is due to kick in on 8 September.
Carney is also expected to join European Commission President Ursula von der Leyen’s State of the Union address on 16 September, as he shored up relations with Canadian allies.
This isn’t the only new spat that the US has involved itself in. Following Trump’s declaration of ‘Operation Economic Outcast’ – a campaign of tightening sanctions on Iran – Beijing warned that it would retaliate if its own businesses were impacted by the campaign.
A Chinese foreign office spokesperson warned that “China will take all necessary measures to firmly safeguard its rights and interests.”
Good week/bad week: Some good news for the wider economy. Barclay’s latest Business Prosperity Index has found that British business confidence is rising, with more companies open to long-term investment that boosts skills, equipment and productivity.
The bank’s Q2 Index, published yesterday (27 August), found that 86% of business leaders said they were confident in their own firm and 63% said they were more confident in the UK economy
However, one part of the UK economy that has had a bad week is the automotive industry. The latest data from the Society of Motor Manufacturers and Traders found that UK vehicle production fell by 11.6% in July because of weaker export numbers and summer showdowns.
Exports to all major markets were down, most notably the EU but also the US, Turkey, China and Japan, with all reporting double digit falls.
How’s stat? 3% of GDP. That’s the 2030 defence spending target that chancellor John Healey set when defence minister, which he’s now reportedly set to row back on in the upcoming Autumn Budget.
The FT reports that several government insiders have said that while Healey will aim to fulfil Nato defence spending commitments of 3.5% GDP by 2035, and also fund the Defence Investment Plan (DIP) put forward by former PM Sir Keir Starmer earlier this year, the 3% spending milestone for 2030 is now in question.
The publication reports that Healey has struggled with financial constraints since becoming chancellor as part of Andy Burnham’s government and is focusing on filling a defence equipment funding gap of nearly £5bn.
Opposition and commentators alike may seize on the fact that Healey resigned from his defence minister role over what he declared to be an underfunding of the military in Starmer’s first DIP.
Quote of the week: “You're at war when you're attacked, we got attacked.”
Carney, on the breakdown of US trade talks and the necessity of a strong response.
The week in export controls: The Office of Trade Sanctions Implementation (OSTI)’s annual review found that 88% of reported controls breaches related to Russian sanctions, amounting to 156 of the 178 cases.
The Export Control Joint Unit (ECJU) published data on 2,705 licensing decisions for standard individual export licences (SIELs), showing that 96% of these applications were approved with only 4% refused.
Healey imposed another 240 sanctions on Iran and reiterated the government’s desire to continue putting economic pressure on the Iranian regime.
What else we covered: There was a long-read explainer outlining the requirements for importers, manufacturers and warehousekeepers of vaping products, which will become subject to a new duty regime from 1 October.
In the Member Spotlight this week, CabinZero CEO and founder Neil Varden, who shared how he took his idea for a travel product and turning it into a King’s Award-winning, export-led business.
HMRC’s head of customs intermediaries policy Mark McGuire starred in the first of several videos in a series on the practical implications of the new BSI Customs Intermediary Standard, beginning with what the standard is and what it means for businesses.
True facts: Chinese-manufactured robots are becoming increasingly capable across a number of skills, from taking Usain Bolt’s 100m record to taking on each other in kung fu fights, but Reuters asks whether they’ll be capable of manufacturing anytime soon.
