By Jeanna Smialek, The New York Times, 2/14/2025
MarketMinder’s View: Yes it does, but it also offers a window into the scale and scope of tariffs’ effects. So we like this piece but would also go further. When President Donald Trump levied tariffs on steel and aluminum imports during his first term, the EU responded with a 25% tariff on American whiskey. Officials there suspended that tariff in 2021, but it is set to return at March’s end—possibly at higher rates—as retaliation to Trump’s latest tariffs. Why whiskey, out of the hundreds of billions of dollars’ worth of merchandise the US exports to the EU annually? Tariffs are about negotiations, and whiskey is excellent leverage. “Tariffs on consumer products like bourbon generate news headlines and disproportionately hit specific geographies, inflicting a lot of political pain at a limited cost. And because the European Union’s whiskey tariffs are set to kick in automatically at the end of next month, they offer the continent a chance to exert pressure on the United States without having to come to a new political compromise, and without necessarily escalating a trade conflict.” Among the factoids they will surely cite: “American whiskey exports to the European Union fell 20 percent in the year after the imposition of 25 percent tariffs, according to industry data. E.U. liqueur and cordial exports also dropped sharply.” Distillers are worried about a repeat, while cocktail lounges in the EU are hoarding bottles and debating whether to pass tariffs on to their customers. The article notes the lost sales in 2019, estimated at $100 million, were a rounding error relative to the whole US economy. But we dug into the data a little more at the US Department of Agriculture’s website and found some fun nuggets. While the EU’s imports of US distilled spirits fell by $141.9 million in 2019, spirits exports to Japan jumped by about $20 billion. South Korea, Mexico and the UAE also bought significantly more. The industry began adapting to the EU’s barriers by cultivating new international markets. It wasn’t a full offset, but these things are always gradual. The EU has also upped its imports bigtime since then, buying over $1.2 billion of US spirits last year, so the industry is starting at a better place this time.
Giant Gas Field Discovery Could Power Britain for a Decade
By Jonathan Leake, The Telegraph, 2/14/2025
MarketMinder’s View: This one is interesting for a few reasons. It also deals with a single, privately held company’s oil and gas discoveries, but we are here for the broader theme of energy development in the UK. An oil and gas exploration company has revealed a major find: a gas field that could supply about a decade’s worth of projected demand if politicians allow it to go forward, “generating tens of thousands of jobs” in the process. However, exploiting it would require hydraulic fracturing, which is currently banned in Britain. There are a lot of barriers here. One, opposition to fracking has historically been bipartisan. The prior Conservative government enacted the existing ban, and the current Labour government has proposed making it permanent. Energy Secretary Ed Miliband says this find doesn’t change his plans, but Prime Minister Keir Starmer and Chancellor of the Exchequer Rachel Reeves have implied their growth agenda will override niche interests. So this is potentially a big political test. Even if growth wins out as top priority, however, it doesn’t guarantee a major UK fracking boom. Unlike the US, where private landowners have major incentive to allow fracking, mineral rights in Britain rest with the Crown. Landowners don’t get the financial windfall from resources under their property. Then, too, a major reason the last fracking attempt failed was that the UK’s geology was unfavorable. The rock layers were twisted all over and among themselves—the strata weren’t flat and easy to access like the US’s shale basins. Will that issue be different in the newly discovered field? Unclear, based on current information. But without major local economic incentives to try it, we wouldn’t pencil in a gas boom. Now, if it does come off, it would be an example of long-term forecasts like those projecting perpetually declining UK energy supply being silly exercises unable to account for all potential changes. But ultimately, we see this more as a near-term political test for investors to watch than a meaningful economic driver.
Does the Government Really Know What It Wants From the CMA?
By Nils Pratley, The Guardian, 2/14/2025
MarketMinder’s View: The subject matter here is a bit niche, but we think it illustrates an important, globally applicable point. It also delves into politics, so as a reminder, MarketMinder is nonpartisan, preferring no politician nor any party—we assess developments for their potential economic and market effects only. And as the article highlights, doing this assessment requires digging into policies’ details, not just politicians’ broad brushstroke proclamations. Pro-growth policies can sound very nice, but if there is no detail backing them up, then the effects may be minimal. (The reverse is also true—policies can sound sweeping and destructive yet have no actual teeth.) In this case, the UK government, as part of its agenda to spur growth through deregulation, replaced the head of the Competition and Markets Authority—the merger watchdog, basically—and Business Secretary Jonathan Reynolds nudged the new regime toward a more “agile” approach. But the remit is long on buzzwords and short on specifics. Some are clear, like speeding the approval process from 35 business days to 25. “The trickier ones are ‘predictability’ and ‘proportionality’. What, for example, does taking ‘a proportionate approach to looking at global deals’ mean?” The article surmises that the kerfuffle over a US Tech giant’s purchase of a software developer in 2023 might not happen again under a “proportionate” regime, but that is only a guess (also, MarketMinder doesn’t make individual security recommendations, and those here are incidental to the point). “The rest of it, though, raised more questions than answers, certainly when it comes to moving the growth dial. The real tension in this area is what happens if the ‘pro-growth’ agenda collides with the ‘pro-competition’ one when the CMA is considering whether to shake up a UK market. On that score, it is hard to say we learned anything.” Governments the world over do this, leaving the onus on investors to dig into the specifics and potential unintended consequences as they weigh the likelihood that reality beats expectations.
By Jeanna Smialek, The New York Times, 2/14/2025
MarketMinder’s View: Yes it does, but it also offers a window into the scale and scope of tariffs’ effects. So we like this piece but would also go further. When President Donald Trump levied tariffs on steel and aluminum imports during his first term, the EU responded with a 25% tariff on American whiskey. Officials there suspended that tariff in 2021, but it is set to return at March’s end—possibly at higher rates—as retaliation to Trump’s latest tariffs. Why whiskey, out of the hundreds of billions of dollars’ worth of merchandise the US exports to the EU annually? Tariffs are about negotiations, and whiskey is excellent leverage. “Tariffs on consumer products like bourbon generate news headlines and disproportionately hit specific geographies, inflicting a lot of political pain at a limited cost. And because the European Union’s whiskey tariffs are set to kick in automatically at the end of next month, they offer the continent a chance to exert pressure on the United States without having to come to a new political compromise, and without necessarily escalating a trade conflict.” Among the factoids they will surely cite: “American whiskey exports to the European Union fell 20 percent in the year after the imposition of 25 percent tariffs, according to industry data. E.U. liqueur and cordial exports also dropped sharply.” Distillers are worried about a repeat, while cocktail lounges in the EU are hoarding bottles and debating whether to pass tariffs on to their customers. The article notes the lost sales in 2019, estimated at $100 million, were a rounding error relative to the whole US economy. But we dug into the data a little more at the US Department of Agriculture’s website and found some fun nuggets. While the EU’s imports of US distilled spirits fell by $141.9 million in 2019, spirits exports to Japan jumped by about $20 billion. South Korea, Mexico and the UAE also bought significantly more. The industry began adapting to the EU’s barriers by cultivating new international markets. It wasn’t a full offset, but these things are always gradual. The EU has also upped its imports bigtime since then, buying over $1.2 billion of US spirits last year, so the industry is starting at a better place this time.
Giant Gas Field Discovery Could Power Britain for a Decade
By Jonathan Leake, The Telegraph, 2/14/2025
MarketMinder’s View: This one is interesting for a few reasons. It also deals with a single, privately held company’s oil and gas discoveries, but we are here for the broader theme of energy development in the UK. An oil and gas exploration company has revealed a major find: a gas field that could supply about a decade’s worth of projected demand if politicians allow it to go forward, “generating tens of thousands of jobs” in the process. However, exploiting it would require hydraulic fracturing, which is currently banned in Britain. There are a lot of barriers here. One, opposition to fracking has historically been bipartisan. The prior Conservative government enacted the existing ban, and the current Labour government has proposed making it permanent. Energy Secretary Ed Miliband says this find doesn’t change his plans, but Prime Minister Keir Starmer and Chancellor of the Exchequer Rachel Reeves have implied their growth agenda will override niche interests. So this is potentially a big political test. Even if growth wins out as top priority, however, it doesn’t guarantee a major UK fracking boom. Unlike the US, where private landowners have major incentive to allow fracking, mineral rights in Britain rest with the Crown. Landowners don’t get the financial windfall from resources under their property. Then, too, a major reason the last fracking attempt failed was that the UK’s geology was unfavorable. The rock layers were twisted all over and among themselves—the strata weren’t flat and easy to access like the US’s shale basins. Will that issue be different in the newly discovered field? Unclear, based on current information. But without major local economic incentives to try it, we wouldn’t pencil in a gas boom. Now, if it does come off, it would be an example of long-term forecasts like those projecting perpetually declining UK energy supply being silly exercises unable to account for all potential changes. But ultimately, we see this more as a near-term political test for investors to watch than a meaningful economic driver.
Does the Government Really Know What It Wants From the CMA?
By Nils Pratley, The Guardian, 2/14/2025
MarketMinder’s View: The subject matter here is a bit niche, but we think it illustrates an important, globally applicable point. It also delves into politics, so as a reminder, MarketMinder is nonpartisan, preferring no politician nor any party—we assess developments for their potential economic and market effects only. And as the article highlights, doing this assessment requires digging into policies’ details, not just politicians’ broad brushstroke proclamations. Pro-growth policies can sound very nice, but if there is no detail backing them up, then the effects may be minimal. (The reverse is also true—policies can sound sweeping and destructive yet have no actual teeth.) In this case, the UK government, as part of its agenda to spur growth through deregulation, replaced the head of the Competition and Markets Authority—the merger watchdog, basically—and Business Secretary Jonathan Reynolds nudged the new regime toward a more “agile” approach. But the remit is long on buzzwords and short on specifics. Some are clear, like speeding the approval process from 35 business days to 25. “The trickier ones are ‘predictability’ and ‘proportionality’. What, for example, does taking ‘a proportionate approach to looking at global deals’ mean?” The article surmises that the kerfuffle over a US Tech giant’s purchase of a software developer in 2023 might not happen again under a “proportionate” regime, but that is only a guess (also, MarketMinder doesn’t make individual security recommendations, and those here are incidental to the point). “The rest of it, though, raised more questions than answers, certainly when it comes to moving the growth dial. The real tension in this area is what happens if the ‘pro-growth’ agenda collides with the ‘pro-competition’ one when the CMA is considering whether to shake up a UK market. On that score, it is hard to say we learned anything.” Governments the world over do this, leaving the onus on investors to dig into the specifics and potential unintended consequences as they weigh the likelihood that reality beats expectations.