TODAY, at least, it seems rather ironic that a Republican US president would deploy large-scale tariffs against the country’s historic allies and trade partners alike, as Donald Trump has now done. In time, however, we may simply note this week as a milestone in the party’s transformation from a (relatively) centre-right, free-trade operation into a far-right, mercantilist one.
The Democrats, for their part, still have to decide where they stand as a result of the shift in the duopoly of American politics (which explains, in part, why they have seemed disorganised since Trump’s re-election as president). They have opposed Trump’s tariffs, but it remains to be seen whether the self-styled party of workers and unions truly intends to take up the mantle of free trade single-handedly.
Trump’s tariffs will undoubtedly contribute to a reorientation of global trade – away from the US, perhaps – though the full consequences remain to be seen. At the same time, given that unpredictability is the hallmark of this US administration, we should not be surprised if Trump makes further sudden moves, either to expand or to contract the tariffs, in the coming weeks and days (or hours, for that matter).
Whatever the exact course of US trade policy in the near term, it is abundantly clear that Trump has alighted on tariffs as a favoured policy lever. This penchant seems to appeal to the president on multiple levels.
To start, the deployment of tariffs in this manner, with the broadest of brushes and in the absence of a serious trade dispute (particularly with allies such as the EU, Japan and the UK), is clearly intended as economic coercion. Trump appears to favour economic coercion over military coercion (fortunately, undoubtedly), likely as a dual function of his desire to achieve a performance at the lowest cost (as he perceives it) and of his detection that the US electorate remains weary of visible military engagements.
Trump also probably favours making use of tariffs given that he can execute them (or, at least, his administration perceives that it can execute them) without much interference from the other branches of the federal government. It is obvious that, in his second term, Trump is intent on expanding the executive power of the president to its limits – and perhaps beyond.
Yet, above all, tariffs may well entice Trump so much (compared to other aspects of trade policy or indeed other measures for economic coercion) because the president can seemingly change them at whim. Tariffs can be easily operationalised in the service of Trump’s capricious nature: Applied one day, changed the next day, removed the day after that, and reapplied the day after that. They have the potential for high economic impact on trade partners and they are convenient fodder for the daily spectacle which Trump seems compelled to offer the American public.
Did the UK get off lightly?
The fact that Trump has applied only the “minimum” tariff level of 10% to imports from the UK, instead of the 20% imposed on imports from the EU, is not a cause for much celebration. The UK, fully on its own since Brexit, will still be buffeted by the global consequences of Trump’s tariffs. In particular, it will be vulnerable to being caught in the economic crossfire between the US and the EU – a witness and not a protagonist.
More to the point, Trump is famously mercurial. While he has levied tariffs of 10% on many British exports today, he could well increase the tariffs to 20% (or even beyond) at any point. It is understandable that the UK Government is desperately seeking some form of trade deal to exempt the UK from this maelstrom. Nevertheless, the prospects for success seem low – and, fundamentally, any deal could be abandoned by the Trump administration or superseded by events in short order. The only veritable protection for the UK from Trump’s trade policy is to be part of a larger trading entity – namely, the EU. Yet, as we know, successive UK governments were content to deliver Brexit.
We can only hope that Trump’s tariffs, and his wider mercantilist stance, are a singular aberration in US politics rather than the new norm. Many Americans are not particularly ideological, valuing economic prosperity (and sometimes social progress) above all. Trump’s trade policy will surely deliver neither. The fate of these tariffs will lie in whether the American public, not least through the ballot box, expresses sufficient disapproval.
