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05 September 2018

Mustard Gas, Asda and Trump Tariffs



Before the outbreak of World War One, the UK was largely dependent for zinc on smelters in Germany and, to a lesser degree, the Low Countries. To be sure, the concentrate came from the friendly Dominion and ally, Australia, but there was at the time no major zinc smelter in the UK, so it was shipped to the continent and processed there before being imported as refined metal. Zinc is quite important when you are making weapons and munitions, so the Avonmouth smelter complex - well-known to generations of LME traders - was rapidly developed, under the aegis of the state-owned National Smelting Company, when war became inevitable. 

That much is pretty common knowledge. What was new to me, when I looked at this subject, was a nasty little rider in there. As well as producing zinc, the complex was designated by the Minister of Munitions later in the war to be the main UK producing centre of mustard gas. They only got production under way in time to ship the product for filling into shells and despatch to France in the late summer of 1918, but when it got there, it went into use. It was dangerous at home as well as in the Front Line, incidentally; there were deaths, illnesses and over 1000 incidents of burns amongst the (mainly female) workers.   

Now, I know this analogy is a bit laboured and clunking, but stick with it. That smelter construction a hundred years ago was an example of a major policy decision being made, not on economic/industrial grounds, but on political ones - in this case, because of the exigencies of war. If we are further prepared to accept that politicians motives almost always have more to do with their prospects of re-election than with a desire to bother with social improvement, then perhaps the logic of President Trump’s tariff wars become clearer.

In pure economic terms, they don’t make much sense. For example, the US has around eighty times more jobs in businesses which consume steel, and whose input - and therefore presumably output - prices will be increased by the tariff imposition, than it does in the domestic steel making industry, which will presumably benefit as foreign competitors’ prices rise. One would probably find similar statistics in the other industries affected. That won't actually be good for American consumers.

So why do it? The world’s cheap manufacturing base shifts naturally over time. Think Britain during the nineteenth century, Japan in the 1960s, 70s and 80s, Korea, Taiwan - and now, China. Attempting to turn back the clock on those changes looks pretty much doomed to failure; after all, powerful though it is, the US is only one part of a global economy, which has been moving steadily away from trade protection towards free trade.

However, whatever we may think of the overall reality of Donald Trump, there is one area where I would argue that is he expert. He knows how to talk to the people who elected him. He has higher popularity ratings - although by no means impressive - than most other free world leaders. And, as a politician, for sure he understands that that is what will get him re-elected. So forget the economic pros and cons of trade barriers; they don’t matter. It’s all about getting and keeping votes. Sure, it will probably in the long run be detrimental to the US economy, but why worry about the long run? Already, the guilty bogeymen are being named - China, Mexico, Canada, EU (doesn’t actually matter who, really), and look! Here’s the President, on his white charger, riding to rescue American jobs from those pesky foreigners and evil offshoring corporations. That’ll get the Rust Belt votes in……

I’m not sure that cynicism and self-interest have always been the guiding light of politicians, but right now, I’m sorry to say, I think that’s where we are. So what if it all comes home to roost after the next election? Saying the right things now, ignoring the future pitfalls, and the target is no further than November 2020.

So what have Asda got to do with this? Well, to go back to the beginning, after the Avonmouth complex was closed, it was sold for redevelopment, principally as an Asda distribution centre. Shortly after the development began, worked was stopped when they discovered a mustard gas shell on site. The bomb disposal people dealt with it, but the site was closed for a year while they made sure there was nothing else unfortunate lurking under the ground….. I’m sure you can all pursue the analogy for yourselves………  


I apologise for this column not having appeared for the last couple of weeks; I was in the middle of  South Africa, with very limited internet access, looking at animals. At least there it’s easy to see who is predator and who is prey.   

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