Forty years in the wilderness?

I doubt it will be that long but the Remainers have a long wait. Or perhaps not so long if, as I suspect, the UK will wind up with no deal at the end of the year, thus making Brexit even more painful. One thing is for sure, Boris Johnson isn’t going to accept a deal that leaves the UK close to the EU (à la Switzerland) and the EU isn’t going to give the UK access to a Single Market that doesn’t include free movement of peoples. And you can count on the US to exploit its superior bargaining position in free trade talks. That probably means higher prices in the UK for prescription drugs and letting American agricultural products in, GMO or no GMO. At least, we can expect the EU to keep its doors open to the repentant prodigal.

Having bet it all on stopping Brexit and lost, Remainers now look to keeping Britain as close to the European Union as possible.

Pass the popcorn

“To side with America rather than the EU, as Johnson has been showing recently, risks committing the UK to far more than Brexit.

“Johnson is a risk-taker: while his gamble on Trump might benefit him today, it also risks breaking Britain, splitting the four-nation Union, and potentially putting it on the wrong side of emerging geopolitical fault lines.”

This weekend, Boris Johnson is making his leadership debut as on the world stage at the G7 in the French resort of Biarritz.

But he said they’re easy to win!

Paul Krugman in the New York Times: “So how will this end? Trade wars almost never have clear victors, but they often leave long-lasting scars on the world economy. The light-truck tariffs America imposed in 1964 in an unsuccessful effort to force Europe to buy our frozen chickens are still in place, 55 years later.

“Trump’s trade wars are vastly bigger than the trade wars of the past, but they’ll probably have the same result. No doubt Trump will try to spin some trivial foreign concessions as a great victory, but the actual result will just be to make everyone poorer. At the same time, Trump’s casual trashing of past trade agreements has badly damaged American credibility, and weakened the international rule of law.”

The pain is real, but the coercion isn?t.

“U.S. Farmer Income Drops Most Since 2016 as Trade War Losses Mount”

I don’t understand. Trade wars are easy to win and we’re supposed to be tired of winning by now.

Bloomberg: “The report provided fresh evidence of the growing financial strain on U.S. farmers hit by the trade war, low commodity prices and a series of natural disasters including spring floods in the Midwest. With rural voters a key part of Trump’s electoral coalition, it also underscores the political pressure to conclude the China trade war as U.S. negotiators begin another round of talks in Beijing this week.”

International trade 101

Paul Krugman of the New York Times summarizes the findings of a group of economists from Columbia, Princeton, and the Federal Reserve: “The conclusion: to a first approximation, foreigners paid none of the bill, U.S. companies and consumers paid all of it. And the losses to U.S. consumers exceeded the revenue from the new tariffs, so the tariffs made America poorer overall. …

“Putting it all together, the Trump tariffs have raised consumer prices, rather than depressing foreign earnings. Some revenue has been gained, but there has also been what amounts to tax avoidance as consumers turn to other, untaxed sources of what we used to import. But this tax avoidance itself comes at a cost, so the U.S. as a whole is left poorer.”

Consumers, not foreigners, are paying the Trump tariffs.

Remember that trade wars are easy to win

“In January and February it’s the bankers who will largely decide farmers’ fates. Most farms have to borrow operating cash for each coming year to buy things like fuel, seeds and chemical fertilizer.

“Right now, it’s a question of what to plant to make those costs back. Not much in dryland is making money right now. Prices are at or below cost of production in this area for wheat, barley, rapeseed, lentils, garbs and peas.”

The largest importers of crops like lentils, garbanzos or peas ? China and India ? aren't buying because of trade wars and tariffs. But farmers already planted in anticipation of sales.