March 20, 2017
Dennis Gartman is editor and publisher of The Gartman Letter, and strategic advisor of the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN). He regularly contributes to AlphaBaskets and lends his institutional insight to educate advisors and investors about commodities and the forex markets, including about trading gold in different currency terms.
The “big news” is that the G20 finance ministers, having met over the past weekend, have dropped an anti-protectionist commitment from their post-meeting communique after opposition from the US. This we find truly dismaying. The G20 ministers left their two day meeting without renewing a pledge to sponsor and support free trade that had become part of the usual post-meeting communiques. Indeed, last year the finance ministers unanimously vowed to “resist all forms of protectionism.” They’ve stood down from that pledge this year in light, apparently, of President Trump’s aggressive “America First” policy. The Ministers, it seems, are fearful that if the US pursues trade protection in the name of “fair” trade then they shall have no choice but to reciprocate.
This is our greatest fear regarding the global economy: that individually and collectively we have learned nothing from the 30’s and the Depression that was brought about with the advent of the Smoot-Hawley tariffs that took a simple, but deep, US recession following the stock market crash of ’19 and turned the world into a trade-limited Depression.
Trying his best to put a better “face” on the meeting’s end, US Treasury Secretary Steve Mnuchin said he would not read too much into his country’s desire to change the language in the communique, as “what was as in the past [communiques is] not relevant.” This is nonsense, however, for this is a material change in direction no matter what Mr. Mnuchin would wish us to believe. We give him credit for trying, however, and we note that he also said that he wished to be “very clear that we do believe in free trade but we believe in balanced trade.” Balanced trade; Fair Trade… either are rhetorical facades for trade protection. Mnuchin knows better than this… we hope.