Afternoon Coffee: Pacific Nations Welcome New Trade Deal, Customs Challenges Front and Center in Brexit Scenario Planning

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The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a replacement deal for the Trans-Pacific Partnership (TPP), entered force Dec. 30, bringing revised trade rules and tariff cuts to the pact’s six currently participating nations, Supply Chain Dive reports. The new deal applies to Australia, Canada, Japan, Mexico, New Zealand and Singapore. Five other nations — Vietnam, Brunei, Chile, Malaysia and Peru — are also members but will officially join at later dates.

Customs Challenges Cloud Brexit

The uncertainty surrounding how cleanly the U.K. will exit the European Union in March could lead to what The Wall Street Journal is calling “the world’s largest traffic jam.” If the British parliament fails to cement a Brexit deal by March 30, free trade across the English Channel will cease. That means companies will need to submit to customs and other checks — a process they have not needed to prepare for in 45 years.

“The U.K.’s National Audit Office says that up to 250,000 British businesses will have to fill in a customs declaration — each with 84 separate data fields — for the first time,” according to the report.

Manufacturing Slowdown 

U.S. manufacturing output continued to slow in December, showing the effects of higher prices from tariffs and capacity constraints, CNBC reports. The IHS Markit manufacturing PMI registered 53.8 in December, falling nearly 2 points from 55.3 in November, a 15-month low for the index. Further clouding outlooks was declining manufacturer confidence, with optimism slipping to its lowest levels since October 2016 over concerns about "the longevity of new business growth."

Consumer Confidence 

The same bout of pessimism hit consumers in December, as one measure of consumer confidence posted its sharpest decline in more than three years, Reuters reports. The Conference Board’s consumer confidence index fell this month by 8.3 points to 136.4, despite consistently strong signals from the labor market.

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