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Scooped by
Graham Watson
onto International Economics: IB Economics February 24, 6:33 AM
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US president suggests trade war could escalate as administration says it will stop collecting levies ruled illegal by supreme court
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Several international companies are eyeing Morocco's vast solar and wind resources to produce and export energy. The new investment could boost Morocco's economy and labour market. But what is it like to try to start an energy industry from scratch - and who is the energy really for? The FT's Rachel Millard explores the opportunities and tensions in Morocco's emerging energy future.
Graham Watson's insight:
This FT film looks at Morocco's potential to supply renewable energy - both wind and solar power. The question is who is going to benefit from this energy, and is this appropriate?
Morocco is a currently a net importer of fossil fuels, importing 90% of its energy needs, and weaning itself of this will improve its balance of trade, and this might feed into more development. However, with international companies eyeing investment in the economy, shouldn't they also be providing low-cost, green energy for Morocco's citizens.
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Editorial: The US president fights 1970s battles in a financialised age. America faces not a payments crisis but a slow erosion of industrial and technological power
Graham Watson's insight:
This Guardian editorial looks at the reality behind the bluster of President Trump, and why he's wrong in thinking that the US trade deficit is a major problem. It effectively implies that he's viewing the US position through the wrong lens, and hasn't moved beyond a simplistic 1970s view of the world.
As a result, it argues that he's not focused on the more important structural issues that imperil longer-term US economic growth and has failed to recognise how economic gravity has changed.
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US president suggests trade war could escalate as administration says it will stop collecting levies ruled illegal by supreme court
Graham Watson's insight:
Uncertainty. That is it.
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The US Supreme Court ruling that the US president overstepped when imposing levies paved the way for firms to seek a refund.
Graham Watson's insight:
And here comes yet more uncertainty and an opportunity cost for the US government, with FedEx suing for a "full refund" of Trump tariffs. I'll get the popcorn; it's going to be interesting watching this play out.
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If you think the Supreme Court ruling heralds a return to pre-Trump business as usual - think again.
Graham Watson's insight:
More on today's Supreme Court decision, with Dharshini David noting that unpicking Trump's tariffs isn't going to be straightforward because today's ruling doesn't cover all of them, and the fact that many supply chains have already adapted to them.
The overriding theme is that the President's incoherent and chaotic approach to policymaking is creating global uncertainty and that benefits no-one.
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Trump has attacked judges and weakened global safeguards. Someone needs to stand up to the US and stop the erosion of democracy
Graham Watson's insight:
I'll leave this here - an interesting piece on global corruption and its winder implications for the global economy. Empirically, corruption slows economic growth, and is likely to entrench inequality. However, for me, the standout line is that where once the US was seen as the global guarantor of anti-corruption standards, under the current President it has casually sacrificed that role, and in its absence there's a need for new development-focused norms to emerge.
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During winter in Britain fresh produce is sent by cargo ship from the West African nation every week.
Graham Watson's insight:
I'm not sure where to put this, so I've opted for here, if only to give an example of global supply chains. In this case, this lengthy BBC clip looks at where Britain gets its food from, highlighting two Northern Senegalese farms which use water diverted from the Senegal River to water their fields.
There are lots of starting points here - the spread of global agriculture, the costs and benefits of such farming for Senegal, the nature of food miles and the negative externalities associated with shipping.
Anyway you look at it, it's a remarkable example of what globalisation has meant for the global economy.
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Reclaiming Labour’s internationalist heart could also stop disillusioned voters drifting towards Lib Dems and Greens
Graham Watson's insight:
Five years ago, and in line with the UN target, the UK gave 0.7% of its GDP in aid; that figure is now down to 0.3%. However, Heather Stewart argues that the UK's chairmanship of G20 gives the current government the opportunity to reset its stance on aid - or more technically official development assistance, and take the lead on debt relief too.
In doing so, she argues it might return the Labour Party to its internationalist roots and attract back into the fold some of the waverers who have left for the Liberal Democrats or the Greens. The shame is that, given the current state of the public finances, above all else, I can't see this happening.
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The dream of greasy overalls is driven by nostalgia and doesn’t justify policies that harm US consumers
Graham Watson's insight:
This is an interesting article about the state of the US economy, with Eduardo Porter arguing that the US obsession with the preservation of manufacturing jobs is counter-productive. Manufacturing now accounts for only 8% of US jobs and the author argues that it would be considered nonsensical if the same were said as regards agriculture, which accounts for 2% of US jobs.
However, I'll put this in some sort of context. The same newspaper carried a Larry Elliott piece earlier in the week suggesting the exact opposite: that the UK: that a fixation on the services sector and disregard for manufacturing output and employment was counter-productive.
You can't have both, can you? I suspect that neither case is ideal...
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Over the course of 2025, the average tariff rate on U.S. imports increased from 2.6 to 13 percent. In this blog post, we ask how much of the tariffs were paid by the U.S., using import data through November 2025. We find that nearly 90 percent of the tariffs’ economic burden fell on U.S. firms and consumers.
Graham Watson's insight:
Don't say I don't spoil you - here's the link to the original Liberty Street blog carrying the New York Fed's take on the tariff burden borne by US firms.
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Consumers and businesses are not yet taking the hint despite six interest rate cuts
Graham Watson's insight:
Heather Stewart seeks the silver lining in the latest growth cloud, with an optimistic take on the prospects for 2026. She argues that forthcoming interest rate cuts and Budget measures designed to lower prices are going to have a positive impact on consumer and business confidence and that growth is going to pick up. However, that said, growth forecasts for the year range from 0.9% (Ernst & Young) to 1.4%.
The potential headwind? A Labour leadership contest.
Graham Watson's curator insight,
February 13, 5:22 AM
Heather Stewart seeks the silver lining in the latest growth cloud, with an optimistic take on the prospects for 2026. She argues that forthcoming interest rate cuts and Budget measures designed to lower prices are going to have a positive impact on consumer and business confidence and that growth is going to pick up. However, that said, growth forecasts for the year range from 0.9% (Ernst & Young) to 1.4%.
The potential headwind? A Labour leadership contest.
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The departure of Gail Slater has raised questions about the White House's approach to policing big mergers and monopolies.
Graham Watson's insight:
Excuse me if I'm wrong but the President has sought to remove the Governor and a board member of the Federal Reserve, he has sacked the head of the Bureau of Labor Statistics, and now the head of the antitrust division at the Department of Justice (DOJ) has resigned.
I'm just saying, but isn't this authoritarianism in plain sight, and equally, isn't it likely to mean a reduction in the quality of economic policy?
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Editorial: Defending European strategic interests must be a priority to level the economic playing field in an increasingly volatile world
Graham Watson's insight:
Today's Guardian editorial highlights the prevailing environment for international trade and notes that in the light of the protectionism being implemented by the US and China, the EU needs to think about moving away from a purely free trade position and starting to encourage its consumers to "buy European" if the regional economic grouping wants to counter them.
Ideologically, this seems to be counter-intuitive, but the rules of the game have changed and if the playing field's no longer level, there's surely a case for altering the way you play the game.
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The US Supreme Court's decision to block a pillar of US trade policy has caused yet more uncertainty.
Graham Watson's insight:
Just read this article: it can be summarised thus. President Trump has introduced uncertainty into international trade, and that's going to damage growth. Everywhere.
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Upping tariffs may have lifted the president’s mood but it is a headache for the Federal Reserve and its next chair
Graham Watson's insight:
"You. boy...do you want more uncertainty", the caption might say. However, the reality is that the current uncertainty over trade affects both the global economy and the US economy, particularly the conduct of monetary policy in the latter.
Higher tariffs, and greater uncertainty about the future direction of any trade war might see the Federal Reserve stay its hand on future interest rate cuts, irrespective of who the Chairman is, and any sense that Jerome Powell's successor will simply kow-tow and cut rates irrespective of inflation would destroy the credibility of an independent central bank, which might be even worse.
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Economies such as the UK, India, Japan and the EU raced to hammer out agreements, but the blanket rate has left them wondering where they stand
Graham Watson's insight:
This Guardian piece fleshes out the uncertainty affecting global trade, with many of the US's trade partners having spent time hammering out trade deals only to have them quashed by the Supreme Court ruling. If you didn't know, the President thinks that America is "WINNING" as a result of his tariffs. That's exactly what a growing trade deficit would suggest.
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The global levy comes in at 10%, lower than the rate the president had threatened at the weekend.
Graham Watson's insight:
The very definition of uncertainty: the President says one thing, the legislation says another. Despite saying in social media that the new global tariff would be 15%, it's come in at 10% as first stated.
Furthermore, the justification for tariffs to "address fundamental international payments problems and continue the Administration's work to rebalance our trade relationships to benefit American workers, farmers, and manufacturers" is wholly invalid: the US trade deficit continues to widen "widening by 2.1% compared to 2024 and hitting roughly $1.2 trillion (£890bn)."
Were international trade a football match, I fear that the crowd would be chanting "You don't know what you're doing". And the biggest shame is that they'd probably be right.
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The ruling opens the door to potentially hundreds of billions of dollars in tariff refunds.
Graham Watson's insight:
Ooops!
Oh dear, President Trump's tariffs have been struck down by the Supreme Court, by a 6-3 majority and there's confusion about what's going to happen next, with firms potentially now owed hundreds of billions of dollars in tariff refunds.
Yet more uncertainty! And markets have reacted positively to this development signalling what they think about whether or not tariffs are good for the US economy.
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Overall the economy grew 2.2% last year, holding up despite pressures from changes to tariff and immigration policy.
Graham Watson's insight:
The inconsistent growth performance of the US continues with growth slowing to 1.4% in the last three months of 2025, after growing by 4.4% in the previous three month period.
It shouldn't be a surprise - such is the uncertainty associated with the current President, and the lack of consistency in policymaking, that anything other than spasmodic growth would be a surprise. Overall, the US grew by 2.2% in 2025, which is decent growth in relation to the rest of the G7 nations.
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JD Vance is seeking to create a ‘trading bloc’ as shortages and climate crises mean a kaleidoscope of rare earths are increasingly jealously guarded
Graham Watson's insight:
The creation of strategic reserve of critical minerals is becoming a central part of the modern world, and reflects some interesting trends.
In the first place, there's been a surge in the demand for electricity, a combination of the rise of AI and climate change increasing the demand for air conditioning, and not only do the devices themselves, but also the electricity networks need these resources. However, the creation of reserves in other nations also increases the competition for resources and climate change might also threaten supplies of these essential resources.
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The US president wants American energy firms to start extracting the crude but they are reluctant.
Graham Watson's insight:
Merely posing the question seems superfluous: the obvious answer is no, but this article looks in detail at why that's the case and in doing so, provides insight into why doing business in Venezuela isn't going to be straightforward.
In the first place, the existing oil industry infrastructure is poorly maintained and there are even doubts about the size of Venezuelan reserves, which are often said to be the largest in the world, although that, it seems, is highly debatable.
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Prices rose by 2.4% in the year to January, the latest official figures show, the slowest pace since May.
Graham Watson's insight:
At least, US economic news that everyone can enjoy: inflation is down to 2.4%, the slowest pace since the previous May. The President, of course, greeted this in his usual understated way: "Trump told reporters at the White House on Friday...that 'we right now have the hottest country anywhere in the world'."
It creates another interesting monetary policy decision, with rates likely to soften in the months ahead, but probably not quick enough for the President, although some are worried that the full effect of Trump's tariffs haven't yet been fully passed on to consumers.
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Last year, collective import tariff rates on various goods coming into the US more than tripled.
Graham Watson's insight:
Oh dear, the President won't like the narrative here, even if it's been self-evident to all post-16 Economics students since his introduction of tariffs. However, the latest research by the Federal Reserve Bank of New York has reached some rather robust conclusions: "in 2025, the average tariff rate on imported goods rose to 13% from just 2.6% at the start of the year" and "that 90% of the cost of increased tariffs... was paid for by US companies.
And, as if that wasn't enough in the way of fake news, "the Tax Foundation said the 2025 increases cost the average household $1,000 (£734.30). In 2026, tariffs will cost the same household $1,300" offsetting the affects of any Trumpian tax cuts in his Big Beautiful Bill.
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As hiring rates and job openings drop, some worry a tough job market could be here to stay.
Graham Watson's insight:
As the article states: "Layoffs have remained limited, apart from some high-profile cuts at firms such as Amazon and UPS and the unemployment rate has held steady at around 4.3%. Meanwhile, the wider economy continues to grow, expanding at a robust annual pace of 4.4% in the most recent figures." So where are the jobs?
There are a variety of observations, some economically valid about increased automation and productivity, others Aquinas' like in their sophistry. And then there's Occam's razor. Remind me about the President's attitude to the Bureau of Labor Statistics.
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World Bank says children born today could earn 51% more over lifetime if their country’s human capital improved
Graham Watson's insight:
This World Bank research has tried to quantify the opportunity cost of a lack of access to education and healthcare for children in low- and middle-income countries. It reckons - and who am I to quibble with the methodology, other than a cynical and increasingly old Economics teacher - that children born in this environment could earn 51% more over the lifetimes if they had the same access to these services as the best performing nations at these levels of income.
It highlights the factors that limit human capital and these policies that have helped overcome these issues, as diverse nations like Jamaica, Kenya, Krgyzstan and Vietnam have done.
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Uncertainty. That is it.