US President Donald Trump is said to be considering exiting the war with Iran without gaining control of the Strait of Hormuz, raising questions about the long-term economic impact of the conflict as inflation rises across several nations.
The cost-of-living crisis is hitting closer to home for Trump, who is seeing his political support collapse in the polls.
Elsewhere, the UK government has announced that Apple has breached the Russian sanctions regime. It has imposed a fine of over £300,000 on the tech giant.
Unconditional exit for Trump?
Trump has told aides the US could exit the war without re-opening the Strait of Hormuz, according to Wall Street Journal
Trump said that he would be willing to end the US’ campaign against Iran even if the Strait of Hormuz remains closed. Otherwise, a large military campaign would be required to control and secure the area for commercial traffic to re-enter the vital trade corridor.
A large oil tanker has been hit and set ablaze just off the Dubai coast. The Al-Salmi, a Kuwait flagged vessel, is the latest commercial ship to be attacked and damaged since the start of the war over a month ago. Authorities have said the fire was brought under control with no oil spill or injuries to crew reported.
The price of oil spiked once more in response to the news, climbing to over US$100 before dropping down.
At least two Chinese-owned vessels have made the passage, according to data from Marine Traffic, marking the first confirmed crossing by major container carriers since the start of the conflict. Iran said it would not attack vessels for countries that remained neutral in the conflict.
UK prime minister Sir Keir Starmer has urged the British public to “act as normal”, with his government saying that the UK has a “resilient and diverse” supply of energy.
Economies suffer
The energy crisis continues to hit various domestic economies.
British farming groups have warned that shortages of cucumbers, tomatoes and peppers might occur, unless retailers pay more to help them offset energy costs. Starmer pledged to tackle the latest cost of living crisis at the Labour Party’s local elections campaign launch in Wolverhampton.
Inflation in the Netherlands, France and Germany spiked last month, according to analysis from Dutch bank ING. Although Dutch consumers remain “temporarily” insulated from energy spikes, a sharper rise in inflation is expected in the months ahead, while Germany experienced the highest monthly price rises since 2022.
Politico reports that Trump’s approval ratings are sagging, only months ahead of a set of midterm congressional elections that could hand control of the House of Representatives and the Senate over to the opposition Democratic Party.
CNN’s poll of polls shows that Trump registers a 37% approval rating. One recent survey by the University of Massachusetts Amherst (UMASS) found that his approval had fallen to 33% – the lowest of his second term – with UMASS professor Jesse Rhodes calling the numbers “brutal” for Trump and his handling of the economy.
Apple fined for Russian breaches
Technology company Apple has been fined £390,000 by the Office of Financial Sanctions Implementation (OFSI) for breaches of the Russian sanctions regime.
In a report published yesterday (30 March), the OFSI found that Apple Distribution International – an Irish subsidiary of the tech giant – instructed a UK-based bank to make two payments totalling £635,618.75 to a sanctioned company JSC New Opportunities.
According to its page on the UK sanctions list, JSC New Opportunities aids the Russian government’s information, communication and digital tech sector and provides digital services.
OFSI said that the monetary penalty was imposed after the subsidiary company disclosed the breach. The penalty amount was agreed after the government applied a 35% discount for this voluntary disclosure and settlement.
The regulator also said that it considers the responsibility of keeping compliant lies with the organisation directly responsible for the breach.
“Therefore, whilst entities may delegate compliance functions to third parties, including corporate affiliates in a larger group structure, both mitigating or aggravating conduct demonstrated by those relevant compliance functions will be assessed as the conduct of the breacher.”
In a statement, a spokesperson for Apple said the company followed the laws in the country they operated and “take sanctions compliance extremely seriously”.
“After identifying two payments to a developer that days earlier had become affiliated with a sanctioned entity, we promptly and proactively reported our finding to the UK government. We are constantly working to enhance our already robust compliance protocols, which are consistent with industry standard”
Greer slams WTO
The US Trade Representative has slammed the “lack of seriousness of many members” of the World Trade Organization (WTO) after the collapse of negotiations at the recent 14th Ministerial Conference (MC14) in Cameroon.
Jamieson Greer said it was “frustrating that the WTO could not achieve consensus to make the E-Commerce Moratorium permanent or even to extend it for longer than two years”, while his department specifically said that Brazil and Turkey were responsible for the blockage.
“If the WTO cannot achieve this commonsense aim, the US will work outside of the WTO with all interested partners to get it done.”
Better WTO news
Despite reports of a breakdown in negotiations over key topics at MC14, two member nations have hailed “unprecedented political support” for the Facilitation of Development Agreement (IFD).
“An overwhelming majority of WTO Members expressed strong support for incorporating the agreement into the WTO framework alongside other so-called 'Annex 4' plurilateral agreements,” the trade ministries of South Korea and Chile said in a joint press release.
“Despite the absence of consensus on incorporation, the initiative will continue to move forward.”
The Investment Facilitation for Development (IFD) Agreement provides global benchmarks to support countries to improve their investment and business climate, according to the WTO. Three quarters of WTO countries are in favour, with 92 of the 129 being from developing nations.
Other headlines
- The UK and the Philippines have officially launched the UK-Philippines Growth and Investment Partnerships Plus, the UK’s minister for the Indo-Pacific, Seema Malhotra has announced
- The Export Control Joint Unit (ECJU) has changed how it assesses and processes amendment requests for Open Individual Export Licences (OIELs) and offered guidance on how to submit applications under the Agreement on Defence Export Controls
- UK and French farming ministers have reaffirmed “their shared commitment to high standards of animal and plant health, robust biosecurity and sustainable farming practices” in a meeting in Paris yesterday
What we covered yesterday
- Global Trade Today covered the initial fallout from the MC14 meeting, including the failure to agree a new agreement on digital trade
- Trump had mulled taking Iran’s Kharg Island, a major exporting hub for energy
- Houthi rebel groups entered the conflict after launching strikes against Israel, raising fears for shippers who have only recently returned to the Red Sea
You can read all of yesterday’s news here.
