The Trump effect on Australia's federal election

When the narrative identification writes itself

The US and UK struck a trade deal this week that gives the UK some relief from sectoral tariffs but leaves the new 10% baseline tariff in place. Alan Beattie summarized the deal well, noting 'the pact is closer to a protection payment to a mob boss than a liberalising agreement between sovereign countries.'

Post-Brexit UK was a soft touch for a deal of this sort since the UK is more anxious than most to strike trade arrangements to offset the loss of its previous membership of the EU customs area. Other countries are going to be harder for the US to deal with. The Trump administration prefers bilaterals in which it can throw its weight around, but EU rules mean that he will have to deal with EU countries as a bloc. China and Japan have both made the removal of the latest tariffs a pre-condition for negotiations. It is unlikely this weekend's US-China talks in Geneva will yield much of substance, but probably just enough for markets to hang their hat on. It is worth recalling the observation of PIMCO's CIO: 'Believe Trump. He believes in tariffs.'

Politico summarized the various legal challenges to the tariffs currently making their way through the US district courts and it is likely there will be at least some preliminary decisions before Trump's 90-day extension expires on July 9. While this could also be a source of relief on the trade war front, these legal processes will also drag on.

The Trump effect on Australia's federal election

The re-election of the federal Labor (ALP) government in Australia on 3 May with a substantially increased parliamentary majority has drawn inevitable comparisons with Canada's recent general election and the Trump effect on the election outcome in both countries.

I don't usually favor monocausal, after-the-fact explanations for election outcomes that were far from certain before the fact. But last weekend's Australian election was remarkable for being determined by Trump and the trade war in particular.

Bryan Palmer is a great source for aggregated polling and betting market data and the time series for both in the run-up to the federal election are shown below.