Will Trump’s Tariffs Work?

Why is the Labour Government relieved to see Trump impose a 10% tariff on UK exports to the US?

One Downing Street adviser chirped that it’s better than the 20% imposed on other countries – as if losing billions of pounds of trade is some sort of achievement.

This is a total disaster for the UK economy. 17% of everything Britain buys and sells is done with the US. Selling to America was a market worth £180 billion in 2023. Tariffs will make British products more expensive for Americans, taking a mammoth-sized chunk out of the billions of pounds coming into the UK.

They’re the scary headlines. Does it get any less frightening when you drill down into the details?

Our biggest trading partner

Unfortunately, things only get worse for Britain.

The US is by far our biggest trading partner. The £180 billion we rake in from selling British products to America is more than we earn from selling to Germany, France, China, Italy and Spain put together.

Think of all the jobs that depend on sales to the US. Trump’s tariffs could cause a huge spike in unemployment.

When it comes to cars, I can tell you just how many jobs are at risk. 25,000.

British cars have been whacked with a higher 25% tariff – which will add $30,000 to the already-extortionate price of a Range Rover for American buyers.

Quite simply, British cars will be priced out of the American market. This is a sad day for Americans, who will be swapping out their luxuriously smooth Range Rovers for American-made pick-up trucks – which are about as comfortable as a tractor.

But it is doubly sad for Britain’s car industry, which has suffered significant job losses in recent years. 36% of British-made cars are produced in the West Midlands – threatening deep, structural unemployment in an area notorious for being peppered with disused car production plants from the closure of British Leyland in 1986.

A blow for Keir Starmer and Rachel Reeves

Trump’s tariffs have burst onto an already fragile stage of austerity, low growth and high taxes. And, surprise surprise, that’s all thanks to Keir Starmer and Rachel Reeves.

When Reeves announced £40 billion in tax rises in October, you could feel British businesses immediately shrink into a corner. Our supermarkets faced a £5.56 billion tax hike in increased National Insurance contributions alone – and over £1.7 billion was set to be passed onto consumers in higher prices.

Since then, ‘Awful April’ has dragged us down further – with water bills, car tax, TV licences and the energy price cap all going up, up, and up again.

And, as if Labour hasn’t brought Britain to its knees enough, Trump has decided to wade in with a squeeze on UK exports which could topple the tower.

If the UK was officially the second-most miserable country in the world last year, one wonders where this leaves us now?

Why is Trump imposing tariffs?

All of this begs the question: why is Trump imposing tariffs?

The answer is, for exactly the same reason that Britain opposes the tariffs. Trump wants to protect his own. If he’s going to ‘Make America Great Again’, that involves restarting the old engines of American industry which has been rendered uncompetitive against cheap Chinese products. It is no coincidence that Trump has always done especially well in the Rust Belt – the powerhouses of Pennsylvania, Ohio, and Michigan that suffered industrial decline when the US opened its arms to imports.

A major target for Trump has been China, who he has previously accused of ‘dumping’ steel – flooding the markets with cheap Chinese steel to undercut American steel. It’s therefore no surprise that Trump’s latest wave of tariffs included a whopping 54% charge for China.

Will Trump’s tariffs work?

Let me be very clear.

A rising tide floats all boats. Countries have spent decades tearing down the dams halting the flow of international trade, enabling consumers to drink from a river of worldwide wealth.

Trump’s new wave of tariffs have re-erected these very dams – blocking the flow of money around the world, hurting consumers with higher prices and job losses.

Now, of course, Trump thinks Americans will benefit. Damming the US to stop Americans importing from around the world will leave no choice but to buy American – helping US-based businesses and keeping money in the country.

But the world won’t just sit and watch. China and the EU are already poised to retaliate. There will be a global trade war. More and more tariffs will have the effect of building more and more dams to stop the creation of worldwide wealth.

Eventually, that river of money will dry up. We will become a world of isolationist blocks of land that do not touch each other, artificially and perpetually stunting our economic growth.

Will Trump’s tariffs work? No.

Image: Eliot Lord.

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