President Trump claims tariff “is the most beautiful word in the dictionary”. Most economists disagree.
Trump’s plan to impose steep tariffs on Mexico, Canada and China will be a disaster for these countries, by making their exports to the US more expensive.
It’ll backfire on US consumers too. As imported goods become more expensive, inflation will return. Ultimately, US shoppers will foot the bill.
Trump’s trade war will ravage the global economy as companies rethink their expansion plans.
Everyone thought the US had learned its lesson. Washington’s Smoot-Hawley Tariff Act of 1930 sank free trade and triggered The Great Depression.
Yet Trump appears to be pressing on.
Happily, he seems to be leaving us out of it. We should all be breathing a collective sigh of relief. It’s a clear Brexit bonus.
There’s a problem: Keir Starmer. His government is so shell shocked after its desperate start that it doesn’t know what to think.
Instead of keeping us out of the trade war, the PM seems determined to drag us onto the frontline.
I can see three reasons why Trump might let us off. First, he seems to have a sentimental attachment to the old country. His mother was Scottish, after all.
Second, the US has a narrow trade surplus with the UK. It sells us slightly more than we sell them.
By contrast, the US has a goods trade deficit of $68billion with Canada, $279billion with China and $162billion with the EU.
Trump claims they do this by cheating the US. He can’t really say that about us.
Finally, most of what we sell to the US is deemed “services”, such as insurance, pensions and telecoms. It’s harder to slap tariffs on them than physical goods like TVs and cars.
But instead of counting his blessings, Starmer’s reckless pandering to Brussels risks sucking us into war. On the EU’s side.
Starmer talks of “aligning” with Brussels. What that means in practice is submitting to EU regulations, sacrificing sovereignty and shackling ourselves to its failing economic model.
Doing all that just as Trump prepares a new wave of tariffs would be a catastrophic move.
Instead, the UK should be drawing up a free trade deal with America on our own terms.
That won’t be easy. As a bigger, richer country, the US will hold the whiphand in talks and Trump knows it. But at least we’ll be in charge of our own destiny.
We won’t if Starmer turns us back into an EU satellite – just as Trump takes aim.
This trade war could be brutal. Starmer must avoid turning the UK into collateral damage.
