It was both predictable and predicted. Donald Trump, a politician often defined by his unpredictability, is on some questions almost maddeningly consistent. Trade policy is one of them.
“Liberation Day” wasn’t months or years in the making but decades. It was in 1987, as Trump first pondered a bid for the presidency, that he published an open letter in the New York Times, the Washington Post and the Boston Globe. “To The American People,” it opened portentously. “For decades, Japan and other nations have been taking advantage of the United States.”
Trump proceeded to argue that tariffs would allow his country to “end our huge deficits, reduce our taxes, and let America’s economy grow unencumbered by the cost of defending those who can easily afford to pay us”. To an almost eerie degree, this was precisely the message he delivered on the White House lawn yesterday.
In a scene worthy of a JG Ballard novel – an economic atrocity exhibition – Trump announced the biggest act of protectionism since the 1930s by adopting the manner of a cackling gameshow host. Government aides and journalists squinted at his cardboard chart to discover the UK’s fate. If this felt infantilising – invoking memories of learning one’s exam results – that was precisely the point.
There has been relief, even jubilation, at the UK being spared the worst. Britain will face blanket tariffs of 10 per cent compared to China’s 34 per cent and the EU’s 20 per cent. For once, talk of a “Brexit bonus” is justified (EU countries with trade deficits with the US, such as Spain, the Netherlands and Ireland, have still been hit). There will, for now, be no retaliation, let alone a Mark Carney moment – the UK government still hopes to agree a deal that will reduce or eliminate its punishment.
As I reported in January, ministers take inspiration from Japan’s late Shinzo Abe – celebrated by Trump yesterday – who managed the president through hard-headed but charming diplomacy. “Abe proved that you can put your nation’s interest first, while still maintaining a strong alliance with your allies,” wrote Scott Bessent, now US Treasury Secretary, in 2022. Keir Starmer’s strategy of engagement – rejected by the Liberal Democrats as appeasement – depends on achieving the same.
For now, however, there is nothing for the UK to celebrate. True, it has been charged the lowest tariff – as No 10 is keen to point out – but so have 20 other countries including Brazil, Singapore, Chile, Australia, Turkey and Colombia. This wasn’t a diplomatic concession to Britain but the default result of the White House’s mathematical formula (the US helpfully estimates that it runs a trade surplus with the UK).
Remember, too, the 25 per cent tariff on car imports which, IPPR estimates, threatens 25,000 British jobs at the likes of Jaguar Land Rover and Mini’s Oxford plant (one in eight UK-built cars are exported to the US).
There is no sense in which a global trade war is good news for an economy as open as the UK’s. As Keir Starmer and Rachel Reeves know, it threatens precisely the promise of growth and stability on which Labour was elected.
Rather than a new era of calm, Trump’s trade war continues the long pattern of economic shocks: the 2008 crash, Covid-19 and the energy price spike. But this one has been inflicted by our supposed closest ally.
The UK hopes that appeals to Trump’s sentimentality – the monarchy, Scotland – may yet soften the blow. But his worldview is one in which the strong do what they can and the weak suffer what they must. During the 2008 crash, the risk was that banks were “too big to fail”. The risk today, in a new age of great power competition, is that the UK is too small to succeed.
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