No need to panic – Donald Trump’s tariff tantrum is Britain’s opportunity
Donald Trump’s big, shiny, new 25 per cent tariffs on steel and 10 per cent on aluminium were confirmed at the end of last week.
It was a move that will have won him no friends here or across the EU – but he had few of those anyway.
More seriously, it risks crippling his own country’s economy.
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Experts expect the President will be threatening nearly 146,000 jobs in the US with these tariffs. While just 400,000 work in US steel, nearly 4.5m work in jobs that depend on the metal. Prices will rise and profitability will fall in companies that import from overseas, risking American jobs.
The President is calculating that the extra costs he is imposing on citizens will be broad and mostly confined to the eastern and western seaboard states – in other words, the ones that vote Democrat.
Yes, it’s election year in America. And that means Trump is trying to shore up his base: the rust belt voters who so strategically backed him and who bore the brunt of the job losses from globalisation, while the benefits were more dispersed. He’s set on keeping his campaign promise to put “America first”, regardless of the cost to most actual Americans.
But just because the political pantomime baddie of our age wants to punish his own citizens for the audacity of importing products to the US in order to score electoral points, doesn’t mean we have to hit our own citizens in return.
The countries on the receiving end of this absurdity should forgo a tit-for-tat war on trade that is nothing but angry realpolitik. Sadly, it doesn’t look like that’s what’s going to happen.
While Federica Mogherini, the EU’s representative for foreign affairs, has said that EU measures in response will be reasonable, we should fight the idea that taxing one’s own citizens for importing from abroad is ever truly justifiable.
Western liberal democracies have been bastions of liberal trade because it is in the interest of ordinary citizens: it benefits the masses to have access to more goods, at more price points, in a market where they’re treated as rational adults capable of making decisions that match.
The irony is that officials on both sides of the Atlantic understand this.
A couple of weeks back, I headed to Washington DC to catch up on the latest trade talk in the US capital. Nobody I met there thought these looming tariffs would be anything but a disaster for US-foreign relations, for US consumers, and for all of us that have benefited from reducing barriers to trade over the past few decades.
So armed with the knowledge that Trump does not quite control everything in Washington, and that his vengeful protectionism isn’t widely shared, what can Britain do to calm the situation and prevent the imposition of reciprocal madness in response?
Right now, relatively little – at least in public. Our kudos in the European club is going to be, understandably, pretty low as we head to the door. But we should be making the right noises to the US. These should be noises off-stage – anything we say in public will be damnable.
So let’s speak behind the scenes, and capitalise on the fact that Trump’s more reasonable administration in the back office is on-side with the UK.
The trend to multilateralism is also out of vogue in DC, and that presents an opportunity to the UK. We’re looking for bilateral partners to reduce trade barriers, tariff and non-tariff alike. Officials and thinkers there want the same thing.
We should push home that we’re a free trade nation, that we’ll work with anyone that wants to bring down barriers, and we won’t throw rocks in our own harbour.
If the EU insists on retaliation, that message could have real value.
In the long run, Britain has a chance to reset the relationship between Europe and the US. Ironically, our role as a bridge between the two continents might not be ending as we leave the EU, but just beginning again.
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