Daily Brief – EU Tariffs

EU Tariffs

Most people who followed the July 27 Turnberry meeting between POTUS and EU Commission President Ursula Von der Leyen thought that despite grumbling from Germany, France, and Greece, and subject to the EU Parliament ratifying the 15% US tariff rate that Ursula shook hands on, that was it. Not at all. First, there is the matter of the reciprocal EU tariffs on the USA covering US exports of Bourbon, Aircraft, Cars and Soyabean that add up to EUR 93 billion due to come into force tomorrow 7^th August. Then there is the non de minimis joint statement that still needs after a full 10 days has elapsed to be agreed between the USA and the EU, and which is still being negotiated – what did they talk about at Turnberry? The EU yesterday decided to postpone the reciprocal tariffs on the USA for 6 months which is unlikely to be interpreted by the USA as a reflection of the EU’s confidence in the strength of their position and gives rise to the uncharitable thought that the EU machine is more fixated on les vacances annuelles than on protecting the 500 million citizens of the EU. Despite putting out press notices describing Ursula’s steely resolve in the negotiations with POTUS, the EU comes over as looking much weaker than it should.

EUR/USD 1.1538.

UK SMEs

This is what being in government looks like: harder than it looks. Sir Keir unable to shake off being Leader of the Opposition rather than PM, and Business Secretary Jonathan Reynolds trotted out platitudes earlier this week decrying the need for SME business owners to have to put their homes on the line to support their businesses. As the prime and often the only substantial asset that aspiring entrepreneurs possess, borrowing against their homes to fund their burgeoning businesses is invariably the only way to achieve bank finance. At the same time, at the other end of the life cycle new pensions legislation which is going through currently that is the creation of Sir Keir and his Ministers will mean that when entrepreneurs die that SMEs will be forced to put the main company asset i.e. a company building up for sale to settle death duties which in turn will force the closure of the company as it will be unable to operate without premises. Contradictory and not clever as well as being counterproductive from the same government.

GBP/USD 1.3285.

Taiwan and China

Earlier this week, former UK PM Boris Johnson gave a speech at the Prospect Foundation, the Taipei think tank that criticising China for bullying Taiwan and calling for closer ties with the West. BJ was following in the footsteps of only two former UK PM’s in visiting Taiwan: the first was Margaret Thatcher after she left office, and the second and less distinguished was Liz Truss in 2023. What is for sure is that the Taiwanese will have been far better entertained by Boris Johnson than they will be by Sir Keir who is due to arrive in Taipei in the Autumn. While BJ still nurtures hope for his return to front line politics and indeed the Leadership of the Conservative Party, his visit to Taiwan is not about him being on manoeuvres but rather more about him massaging his bank account.

EUR/JPY 170.42.

Jaguar Cars

There is no corner of the world on which POTUS feels unable to opine, and yesterday it was the turn of Jaguar cars and in the hot seat is incoming CEO PB Balaji. We will not reproduce the POTUS tweet but it was, of course, in capitals and described the Jaguar advertising campaign as stupid, woke, and a total disaster. Irritatingly for Jaguar afficionados he has a point.

EUR/GBP 0.8685.

Message in a Bottle

Maybe you were there but in case you were otherwise engaged this day in 1977 The Police played the Red Cow in Hammersmith Road, West London. The entry price was 60p which even for 1977 was a bargain to hear the band that went on to fill stadiums and thence to global stardom.

Just a castaway, an island lost at sea, oh
Another lonely day with no one here but me, oh
More loneliness than any man could bear
Rescue me before I fall into despair, oh

I’ll send an SOS to the world
I’ll send an SOS to the world
I hope that someone gets my
I hope that someone gets my
I hope that someone gets my
Message in a bottle (Yeah)
Message in a bottle (Yeah)

A year has passed since I wrote my note
I should have known this right from the start
Only hope can keep me together
Love can mend your life, but love can break your heart

I’ll send an SOS to the world
I’ll send an SOS to the world
I hope that someone gets my
I hope that someone gets my
I hope that someone gets my
Message in a bottle (Yeah)

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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