Why UK must suffer Donald Trump's trade war – for now at least
The UK should absorb the damage caused by Trump’s tariffs and hope the next president remembers who America’s allies are
As Donald Trump launched the latest salvo in his trade war on most of America’s traditional allies, there was some good news for Scotland. Transatlantic trade in Scotch whisky and US bourbon is now tariff-free, in both directions, which First Minister John Swinney correctly described as a “win on both sides of the Atlantic”.
Unfortunately, any celebrations should be muted, given the effective extension of tariffs on many imports from the UK and dozens of other countries, despite a ruling by the US Supreme Court earlier this year that they were illegal.
The US trade department claimed the replacement levies were being imposed on countries that had failed to take sufficient action to prevent the importation of goods made with forced labour. However, some experts suggested this was merely an excuse, a technically legal reason to get around the court judgment and restore Trump’s beloved tariffs.
‘Unnecessary barriers to trade’
Clearly, at some point, the UK, the European Union and others will have to start defending themselves more robustly if America continues to throw its economic weight around in this way.
However, with Trump due to leave the White House in two-and-a-half years, the most sensible course of action is to absorb the blows, in the hope they are temporary, while seeking to carve out as many exemptions as possible. The success on whisky shows it can be done.
This point was stressed by manufacturing group Make UK said: “The continued application of a 10 per cent tariff underlines the importance of maintaining momentum in UK-US trade discussions under the new government. Manufacturers need certainty, stability and the removal of unnecessary barriers to trade so they can remain competitive in an increasingly challenging global market.”
Trump does not seem to understand that trade is not a zero-sum game, in which someone has to lose so that another might win. Instead, free trade can create a virtuous cycle in which poorer parts of the world get wealthier, thereby creating new markets for goods produced in developed countries.
We can only hope that the next president, Republican or Democrat, will see sense – and remember who America’s friends are.
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