Donald Trump’s approach: making America great again – by pushing up the price of goods and materials from overseas – and getting punters and businesses to buy American instead.
That, at least, is one of the motivations behind his decision to weaponise tariffs, with a trade war now enveloping the UK as well.
From 4am on Wednesday, a 25% tariff on all steel and aluminium imports from anywhere outside the US is being imposed.
Politics latest: Starmer promises to ‘keep all options on the table’
A president protecting the Rustbelt. Or is it?
What makes Mr Trump‘s approach to tariffs so unusual is he is open – more open than any US president I can remember – that it’s also about the politics.
Tariffs are his negotiating tactic of choice. His most beautiful word. They get lowered if you do deals with him. They get raised if you anger him, like Canada did. Remember that when thinking about the role of the EU over Ukraine days after their retaliation.
And it’s more politics than economics – because it’s not immediately clear that what Mr Trump is doing helps US citizens.
The tariff is a form of import tax. They are collected by the US government and the cash goes into the coffers of the US Treasury as goods go through customs.
The business doing the importing pays the tax, but the costs will be passed on. Hurting some American firms.
What’s more, think tanks say his overall tariff plan could damage the economy and knock a percentage point off US GDP in a year. Is this really making America great?
Has the UK responded? Not really. A stern message from the business secretary issued this morning, and he’ll head to the US next week.
In the longer term, striking some form of US-UK trade deal seems the only way out – but that won’t be quick.
What could we be doing? Well, this is how the EU reacted: £21bn of tit-for-tat sanctions from 1 April.
If we were still in the EU, we’d have had to do this. Only because we’re not, and outside the customs union, are we able to do something different in the name of diplomacy.
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Sir Keir Starmer said at Prime Minister’s Questions that all options are on the table – but don’t expect an imminent flip of strategy to something resembling the EU approach.
But who is right? Well, let’s be honest – this isn’t about us. Look at the data from the US Department of Commerce – the UK is the 17th biggest exporter of steel to the US – more than 20 times less than the biggest, which is Canada.
Could the UK even achieve its aims by retaliating, given the differential in scale?
Read more:
Starmer ‘disappointed’ about Trump steel tariffs
How will Trump’s tariffs affect the UK?
The UK has gone down this path for a reason – because Sir Keir has decided to hug the White House close.
They’ve punished us, but we’re not hitting back – hoping that this government remains trusted enough to do business with Team Trump.
A big differentiation from Europe – will Sir Keir reap the rewards?
