A war with no winners; only varying degrees of losers. That is how the media is describing the trade war being waged by President Trump, under the guise of national security. It is rather ironic then, that Canada recorded one of its best months for foreign trade in the same month that Donald applied steel and aluminium tariffs. The Canadian economy looks set to top 3% annualised growth for the second quarter.
However, it seems that 2018 will be remembered for being the year of ‘tit for tat’. While Canada is enjoying a jump in trade exports, Saudi Arabia has instructed its overseas asset managers to sell Canadian equities, bonds and cash holdings at any cost.
This flexing of financial and political muscle is the chosen method of Saudi Arabia, a warning not to interfere in their affairs and linked directly to Canada’s foreign minister calling for the release of Samar Badawi who was arrested last week in a crackdown against dissenting voices. This spat is not over, and the biggest losers could be the 7,000 Saudi students enrolled in Canadian universities on government-sponsored scholarships.
Troubles are mounting for Iran, with its currency weakening against the US dollar and inflation spiralling, its citizens are struggling with rising food prices and fuel shortages in some of its cities. To add to their woes, Donald Trump has reinstated economic sanctions, that had previously been waived as part of the Iran nuclear deal of 2015. Things only look to get worse in November, when the US will increase the punitive measures by banning Iranian oil exports. President Trump has warned that secondary sanctions will apply to anyone doing business with Iran, so while the rhetoric from EU nations has been a pledge to try and preserve economic ties, it is most likely that European companies will sacrifice trade with Iran, rather than risk additional ire from Donald.
Another country that has a weakening currency and not just to the US dollar, but all currencies including struggling sterling, is Turkey. It too is facing economic sanctions from Mr Trump, after the detention of US pastor Andrew Brunson. The US has imposed sanctions on two Turkish government ministers and threatened to double the tariffs on steel and aluminium imports. This has worsened an already dire currency crisis for Turkey, whose Lira was down over 25% for the week. President Erdogan vowed to find new friends and allies to help them out of this spiral and not succumb to Trump’s economic warmongering.
Wars with no winners indeed.
A tenuous link to lighten the mood; this weekend saw the start of the season of the Premier League, which within its twenty teams has two exports from the above maligned countries. Cenk Tosun of Turkey started in Everton’s draw against Wolves and contributed to an assist for Everton’s second goal. Alireza Jahanbakhsh of Iran started on the bench for Brighton against Watford and his 71st minute appearance could not stop his team succumbing to defeat.
