Fears that the global economy could slide into recession in 2020 have been driven to a great extent by concerns over the impact of Trump-inspired trade tensions. With that in mind, it's worth noting for the record a couple of positive developments on the trade front this week.
Today in a ceremony at the White House, the US and China formally concluded a so-called Phase 1 agreement to reduce some US tariffs on Chinese goods and spur additional Chinese imports from the US. In truth it is only a small step, and getting things back to the pre-Trump status quo is likely to be difficult, not least because of Trump's seeming inability to stick to any course of action for very long. Still, it's a move in the right direction.
In the next day or so, the US Senate is expected to take a rare bi-partisan step by approving the trilateral trade deal -- known as USMCA in the US, CUSMA in Canada -- to replace the existing NAFTA agreement. Differences between the new deal and the old are largely cosmetic, but please don't tell that to Donald Trump. It will be good to get this out of the way before the impeachment circus fires up in the Senate next week. Oddly enough, Canada has still not formally ratified the deal, partly because of last year's Federal election, but that should now be no more than a formality.
As always, of course, two steps forward, one step back -- and it's a big one. Just over two weeks from now the insane act of self-harm known as Brexit will take place. The initial impact on global trade will be very limited, since the UK will enter a transitional phase set to last for the remainder of 2020. However, in the absence of a new EU-UK trade deal, an eventual hard Brexit on New Year's Day 2021 could well prove damaging for trade and investment flows and the overall global economy.
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