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It’s a bonding wire that grounds the LU to the engine,helps stop electrolysis and corrosion. It needs to be hooked up and in good shape.
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And helps the trim sensor to function properly.
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Mercury 3L/4 Stroke/Verado Moderator
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As suggested, this is the continuity ground for the mid/swivel bracket. Many models rely on this ground for the trim sender to function properly.