The prime minister’s insistence that, in framing the UK’s response to the Trump tariffs, “We will always act in the national interest” was wise and reassuring. The mood at the moment is to “keep calm and carry on negotiating”, and if there is to be a response, it needs to be weighed, and to represent a fully informed choice. Hence the meeting of business leaders convened in Downing Street in the immediate aftermath of the US president’s announcements.
In the coming days, the full scale and nature of international retaliation will become clearer; so too will Donald Trump’s thinking. From his rambling presentation of the new tariff schedules in the White House Rose Garden, it is not obvious whether these punitive import taxes are designed to kickstart a more benign process involving a global relaxation of trade restrictions, or if they are part of a permanent policy shift aimed at restoring American manufacturing and providing trillions of dollars for the US Treasury. There is, in other words, no need for a rush to action.
Sir Keir Starmer is right to try to maintain the dignity of the nation, as well as to avoid upsetting the combustible Mr Trump, by limiting himself to vague remarks about having “levers at his disposal”. Businesses are being consulted on possible retaliatory actions, but that is all – at least for the time being.
However, with the US economy approximately seven times as large as that of the UK – and Britain still heavily reliant on America for its defence – those levers are not especially powerful ones. Unlike, say, China (in concert with Japan and South Korea), the European Union, Mexico or Canada, the UK lacks the necessary heft to inflict much material damage on American producers and exporters. Any effort to join in with an international assault on Mr Trump’s policy would risk attracting the imposition of even higher tariffs on UK exports, with the corresponding harm to British jobs and economic growth – and to European security and the Ukraine peace talks.
Far better, then, for the British government to keep a “cool head”, as Sir Keir suggests: not only does it suit the prime minister’s general demeanour, but it will help to preserve his unusually warm relationship with a man almost precisely his ideological opposite. Britain is set to watch how things develop, and will continue to engage with American officials on trade, investment, and wider economic relations. If an old and valued friend unexpectedly decides to have a spat, the most rational response is not to hit them back and escalate an argument into a violent rift.
Fanciful as it may seem, this crisis can be turned into an opportunity. As the business secretary, Jonathan Reynolds, told the Commons, a trade deal of some sort could be mutually beneficial, even if that isn’t immediately apparent to President Trump, who is more “zero sum” in his approach to life (as might be expected from his time in real estate).
Sir Keir says that talks are continuing. He should be encouraged by the fact that the UK is to be subjected only to the lower “baseline” tariff of 10 per cent, albeit with the higher charges on cars, steel and aluminium bringing the trade-weighted average up to 13 per cent. When the two leaders met in the White House, Mr Trump expressed the hope that a deal could be done. Despite intense activity, such an agreement couldn’t be reached in time to avoid the new tariffs, but the process – which has been in train since Theresa May launched post-Brexit talks with the US – has begun.
The outlines of such a deal can already be discerned. Negotiables could include a radical cut in the tariffs on US goods, such as cars and agricultural produce, and easier access for qualified, skilled workers through mutual recognition. The UK might have to compromise on its high standards of animal welfare, hygiene, and environmental protection, but that is a tough choice that could be made, in the expectation that consumers would exercise their right to choose.
More difficult, if not impossible, would be meeting the usual demands for improved – inflated – prices to be paid by the NHS to the US pharmaceutical giants. The American negotiators would also have to be properly briefed on the reality of free speech in the UK, which is protected as a human right by law, save for incitement to hatred against specified vulnerable groups.
The real question is whether the achievement of some sort of economic agreement with America – an outcome that would certainly yield benefits – is worth the sacrifices and concessions that are likely to be demanded by Mr Trump. That includes the effect that any such pact would have on our relationship with the EU, in light of the “reset” promised by Labour at the general election.
Even the possibility of such an agreement with the United States is being touted as a “Brexit bonus”, as is the “favourable” 10 per cent tariff. Needless to say, this is highly debatable. Were it still part of the EU, the UK would probably have been treated more harshly, but it would have had the full weight of the largest single market in the world behind it, along with better access to the EU markets that it has lost since Brexit.
As a member state, the UK would also have been able, ironically, to control its own laws on free speech, as well as to protect the NHS and farmers. In other words, a trade deal with America would have to be radically better than currently envisaged in order to make Brexit remotely worthwhile, even in purely financial terms.
And there remains the terrible truth that the US has downgraded its commitment to Nato, and “switched sides” to align with Russia on the matters of Ukraine and European security.
On balance, Sir Keir can best serve the British national interest by pursuing closer relations with Europe, while declining to enact futile retaliatory measures against America and salvaging as much as possible of the US-UK special relationship. The hope is that the Trump era might ultimately pass more smoothly. In any case, balancing and nurturing Britain’s most crucial relationships won’t be easy.
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