Dear Subscribers,
The government has said that it will consult businesses as it prepares a response to the imposition of a 10% tariff on all goods from the UK by President Trump. The UK response has so far been measured and any retaliation is not expected until May. This is a marked contrast from the combative responses of the EU and Canada, amongst others. Were it not for Brexit, the UK would be unable to take this more diplomatic approach.
Starmer embraces Brexit independence
Reports have emerged that UK officials joined representatives from Sweden, Denmark, Finland, Poland, and the Netherlands to discuss plans for a joint rearmament fund operating outside the usual EU institutions. Plans for an EU defence fund have stalled as mediterranean countries worry about the impact it would have on their national debt and French diplomats use it as a way to extract concessions on fishing rights from the UK. The alternative discussed in the past week would involve setting up a supranational bank with the authority to purchase weapons on behalf of participant states.
The EU Commission is preparing a list of US products on which to impose retaliatory tariffs. The list will be presented to Member States on Monday night and a vote will take place on Wednesday. The Commission needs support from at least 15 member states representing at least 65% of the EU population for the measures to come into force.
EU Commission prepares for war
Downing Street has indicated that Donald Trump has approved a deal to hand over sovereignty over the Chagos Islands to Mauritius. There has been no official confirmation from the White House, and no announcement of a deal by the UK or Mauritius. A non-binding opinion from an international court remains the only official justification for the UK proposing to give up a strategically critical base and pay billions for the privilege.
Two Labour MPs were detained and denied entry on arriving in Israel. Israel authorities accused them of having plans to “document the activities of security forces and spread anti-Israel hatred”. The Foreign Secretary criticised their detention, saying that it is no way to treat Members of Parliament.
Media
Julian Jessop on a US-UK trade war
Reason magazine on Milei’s progress in Argentina
Blog
Trump is making a list by Catherine McBride
Trump’s new tariffs are a very clever geostrategic manoeuvre, and the UK government should rejoice that it finds itself on the ‘10% list’. But some of our major exports—cars and aluminium aircraft parts—are on the 25% tariff list. The UK government should start negotiating a full trade agreement with the US and avoid alignment with the EU at all costs.
To make matters worse, the UK has snookered many of its traditional export industries with its energy policies. The UK’s Net Zero policies are already driving UK chemical and plastics manufacturers to the US, and it won’t be long before UK Aircraft parts and UK car manufacturers join them to avoid the 25% tariffs. The trade battle lines are being drawn up—we need to be on the US team. The UK needs a full-fat, tariff-free, quota-free, and non-tariff barrier-free trade deal. And we need it now.
Pushing the Republic of Ireland into being a responsible state by Jim Allister KC MP
The Republic of Ireland has crossed over, with the help of the EU, into seeking special dispensations that not only benefit it but damage others, including by means of their disenfranchisement. It now needs to reverse this anti-democratic course and adopt mutual enforcement.
The experience of constantly being shielded from the normal rules of the game has taken the Republic from a place where not only has it grown accustomed to seeking such benefits but to where it has crossed over, with the help of the EU, into seeking special dispensations that not only benefit it but damage others, including by means of their disenfranchisement. Going forward, there is a desperate need for the Republic to tell the European Union, first, that as a party to the Belfast Agreement they have an obligation to uphold the right of the people of Northern Ireland to ‘pursue democratically national and political aspirations’ from the point at which that right was recognised in 1998, when the people of Northern Ireland had the right to stand for election to make all the laws to which they were subject and, second, that in this context the border solution consistent with this commitment, Mutual Enforcement, must now be adopted.
Trump, Tariffs, and the OBR by Catherine McBride
A brief analysis of how a US-UK trade war will hurt the UK economy, why a high trade intensity is not necessarily a good thing, and why the OBR’s Brexit predictions are looking less and less credible.
The US’s very low trade intensity of only 25% will mean that they can increase tariffs without suffering as much as the UK will if our politicians decide to destroy the economy by further increasing UK tariffs on US imports in retaliation — something that Canada, China, and the EU have all, rather shortsightedly, decided to do.
Key Points
One argument that remainers and rejoiners have been making ad nauseam since before the referendum is that the UK needs the EU to stay competitive in an increasingly turbulent global economy. We are more powerful, they say, as one amongst many and therefore more able to stand up for ourselves and pursue our own national interest.
The Trump tariffs and the international response are proof that this argument is flawed. Thanks to the UK’s independence from the EU, it faces lower tariffs than it would otherwise, is able to pursue a more conciliatory approach to trade talks, and can tailor a response that minimises damage to the domestic economy.
EU exporters selling goods in the US will now face a 20% import tariff. UK exporters doing the same will face a tariff of only 10%. The Trump administration claims that the distinction is justified by the distinction between how US imports are treated in the EU and how they are treated in the UK.
In a report commissioned by the President, the United States Trade Representative identified many barriers to trade imposed by the EU since the UK left. Being outside the bloc, the British government could choose not to align with European rules but to pursue freer trade with America. British exporters should be pleased that Brexit is paying dividends.
As a member of the EU, the UK had no authority to negotiate on its own behalf when it came to international trade. If Britain had remained in the bloc, there would now be no scope for the government to opt out of the EU Commission’s aggressive response to the Trump tariffs. Despite repeated claims that they do not want a trade war, the Commission’s response so far has been to threaten punitive retaliatory tariffs aimed at hurting US business as much as protecting European ones.
By contrast, the Prime Minister (to his credit) has been more measured, saying that he will tailor a response to the needs of UK business while opening up trade talks with the US. With any luck, this will mean that the EU and the US will be at loggerheads long after barriers to US-UK trade have been removed.
