Donald Trump Plots to Leverage UK Brexit Chaos for US Meat Farmers

Anyone following Brexit developments will know that it is all a bit of a mess, with no clear direction.

With PM Theresa May's deal explicitly rejected, a no-deal exit is now a real threat. Despite this, one of the biggest Brexit headlines making the rounds today is nothing to do with the “Withdrawal Deal". Instead it pertains to some hard-line tactics being employed by Donald Trump's administration over the future of the US and UK’s trading relationship. Specifically, the focus is on food standards as reported by Business Insider.

The proposal  by the US seeks to:

"[R]emove expeditiously unwarranted barriers that block the export of U.S. food and agricultural products."

The big issue at hand is that some of these "unjustified trade restrictions," are the allegedly much more stringent food quality standards in the UK relative to the US. Interested in perusing the US FDA handbook to check how many dead insects or rat droppings are allowed in your cereal? Check out the exhaustive report here.  Trump is committed to putting up barriers for free trade on areas where his own country is vulnerable and pushing for other nations to reduce these same barriers when it suits him. For example, China, who have dominated US manufacturers with lower costs and rising work quality.

In regards to fears over foreign meat, here is a classic example of the kind of fear mongering you will see in Great Britain about Trump wanting steaks on British tables,

Trump Administration Takes Aim at "Hypocritical" EU trade Practice

Let’s try and take a deeper dive into the real issues at hand here. Taking the use of Chlorine to wash chickens as an example. The media knows that most people hear Chlorine and think “oh right, the highly poisonous substance that Syria has been using to gas its people."

Due to this negative association, the US allows using Chlorine to wash Chicken is automatically inferred as a terrible thing. In reality, the truth is a lot less clear cut, as Chlorine is quite an efficient way to deep clean Chicken. As this piece explains, a possible reason that the EU doesn’t use this method is that they are trying to encourage better food practices early on in the supply chain. The final product isn’t necessarily less clean than the US. To the contrary, if EU oversight was to fail, then you could conceivably get far dirtier meat than in the US.

President Trump and his advisers know exactly where Europe is hypocritical on trade and they are hitting these areas hard. Automobiles are an area where Europe employs tariffs, and expect Trump to start leaning on German cars once he is done with China.

UK Farmers Bote for De-Regulation, but at What Cost?

If we boil this down, it becomes apparent that this is about more than meat. It’s about the UK industry itself and protecting farmers. British Farmers have made it explicitly clear that they do not want to compromise on food standards. Well, of course they don’t. The Food Standards are there to protect their livelihoods from an influx of US and other foreign meat. The most amusing thing about this, is that British farmers are estimated to have voted leave at a rate as high as 58%.  They voted for de-regulation and now are fighting back against it!

UK MP Michael Gove stated recently; the UK has drawn an apparent line in the sand on this issue. President Trump gets an extremely bad rep for imposing tariffs and being anti-free trade. As we can see from some of our findings today, the EU does the same thing but leverages it by taking the moral high ground.

Food Affordability worse in the UK than in Trump's United States

If you are trying to improve nutrition in the United Kingdom, perhaps regulators should look more at food cost and less at the quality. As this report demonstrates, US food is only of marginally inferior quality and is quite a bit cheaper. The US and the UK come in at joint 3rd! A trade agreement on food with less protectionism could help reduce food costs in the UK, where the cost of living is among many people’s principal concerns as a no-deal Brexit could cause a food shortage.

In the event of a no-deal Brexit, UK-US trade would probably be essential if the EU slammed the door on a close partnership and ramped up tariffs to punish the UK. DT knows all of this and as a result is trying to place a wedge between the UK and Europe, thus opening up the world's 5th biggest economy for his Chicken and Beef.

donald trump dow jones
Donald Trump knows exactly where EU are hypocrites on trade. | Source: AP Photo / Evan Vucci

EU is Just as Guilty of Protectionism as Trump

In global politics, everyone has an agenda. President Trump has built his platform fighting for US industry, and the EU employs very similar tactics. It’s very simple; The EU doesn’t want US farmers whose costs are lower undercutting them when consumers in Europe can’t tell the difference.

Living most of my life in the UK and the US I have seen a very similar approach to food. You can purchase high-quality food for a large price, or low-quality food for a cheaper price. The EU has weaponized its “lofty” standards for a long time for mostly protectionist purposes. In the interest of balance, here is the EU in their own words talking about trade and competitiveness,

I’m all for getting Rat feces out of my food, but levels of hygiene are quite often purely subjective. As this Reader’s Digest article demonstrates, the world is just a dirty place and we have evolved to handle most of it. My point here is  there are trace amounts of unpleasant things literally blowing in the wind. It has to be better to eat a US Chicken in the EU than struggle with pricier food of similar quality.  You can't trash Donald Trump over tariffs but give the EU a pass for doing the exact same thing.

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About the author

Francois Aure
Francois Aure

Financial speculator living in the hills in Los Angeles. J.D. but very much not a lawyer. Favorite trading books are anything written by Jack Schwager. Email: [email protected], Twitter: @bullishtulips

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