A frustrating year 2018 is finally over, closing without having bounced back from months of declining market and commodity prices. Immensely frustrating to us, especially for the metals in which we are involved, as fundamentals point to coming shortages that will only be remedied through higher prices to incentivize new production.
This general decline in prices started this last June as on June 15 the US imposed its first set of tariffs specifically on China (the previously imposed worldwide tariffs on steel and aluminum date back to March 2018). But two years of threats, escalating rhetoric and not obviously thought-through pronouncements in the US had probably already brought the market to a place where it was becoming more and more difficult to believe unconditionally that the current administration is “good for business” – the state of mind that seemed to have prevailed until then.
There might be a parallel with the travails of Brexit in the UK. When the UK voted to exit the European Union in 2016 many (including the UK Treasury) predicted an immediate recession, a weaker pound and other catastrophes. Others had explained this was unlikely for now, as voting “yes” had had no immediate consequences in the physical economy. And effectively, nothing much happened immediately. It is only now, as a better understanding of the extent of the consequences emerge, as businesses start to prepare, as investments decisions take Brexit into account that the consequences of that vote start to visibly accumulate. Two years after this vote, what had been forecast is only now becoming obvious: a weaker currency, slowing growth, lower GDP, postponed investments, workers and business operations transferring to the EU, and difficulties in attracting qualified foreign workers.
It might be the same in the US: after the election of an “unconventional” president who brought with him unconventional aides (unconventional having here many potential meanings), nothing immediately changed. But after two years of turmoil without clearly understandable policies or objectives, wreaking havoc on established conventions and weakening government agencies, the consequences are bound to begin to appear.