Donald Trump has bagged an extraordinary trade deal. From now on, most EU exports to the US will be subject to a 15 per cent tariff, which will raise tens of billions of dollars in revenue for the US Treasury. Tariffs on US car exports to the EU will be lowered to 2.5 per cent, while Brussels has agreed to purchase $750 billion worth of natural gas, oil and other energy imports from the Americans. Trump has won the negotiation: game, set and match.
From the American point of view, a trade reset with the EU was essential. The EU has enjoyed a huge trade surplus with the US for decades, with the 2024 deficit amounting to $235 billion. Running trade gaps of this size will eventually beggar your nation, because it necessitates the selling of assets and the raising of debt to pay for imports. This is not a theory, it is merely the mathematics of international trade. Trump and his vice-president, JD Vance, are right to address the problem directly.
Those of us who support trade protectionism as a tool of industrial policy tend to advocate two approaches to tariff policy. First, one can adopt a cautious attritional approach whereby a moderate tariff – say, 10 per cent – is applied to all imports and increases gradually until the trade deficit is eliminated, or reduced to acceptable levels.
Alternatively, you can adopt Trump’s ‘shock and awe’ tactics by threatening unfeasibly high tariffs, targeted at nations with very large bilateral trade surpluses, in the hope that deals will be struck. This bold approach seems to have worked for the US. As the August deadline for his punitive tariffs has arrived, panic has ensued, many nations have capitulated to his revised terms and deals have been struck.
Trump’s biggest win to date is with the EU. And if the deal seems one-sided, that’s because it is. It was difficult not to smile at the gloomy reactions from politicians across the EU when the deal was announced – naturally above the heads of voters across the bloc who have no means of influencing the technocrats before they capitulated to it. German chancellor Friedrich Merz thought the deal would ‘substantially damage’ the financial interests of his country. François Bayrou, France’s prime minister, described it as an act of ‘submission’. It will be interesting to see how swiftly and smoothly the deal will be ratified, as it requires the consent of all 27 member states.
For us in Britain, it’s worth comparing Trump’s success against the EU with the UK’s botched, inept and frankly cowardly Brexit negotiations. Of course, the UK is nowhere near as powerful as the US but it wasn’t as though Britain had no cards to play. It did – the principal one being the EU’s large trade surplus, and the possibility of the permanent replacement of many of these supplies with goods from other markets. (Post-Brexit, the EU’s trade surplus with the UK remains at £96 billion.) No, the failure was in not playing any cards at all. Preventing the EU from taking control over the UK’s fishing grounds, for instance, required only one thing – a government willing to say no.
The UK’s problem was that so many of our ruling class were outwardly opposed to Brexit itself. The idea of national self-assertion – or indeed even of the national interest – is repellent to them. It was hardly a surprise that Brussels was able to get the better of us in the Withdrawal Agreement back in 2018, since half of our own team sided with the opposition.
But it goes deeper than this. There is a distinct lack of political grit among our rulers. An inability to show bravery has become a feature of the British ruling elite. Time after time they opt for easy, short-term options instead of choosing tougher choices that might pay off in the long term.
Uncontrolled immigration may be the clearest example of this. Unable to contemplate the prospect of post-Brexit labour shortages, or unwilling to train British citizens, Boris Johnson panicked as skills gaps emerged as the UK came out of lockdown. The result – the ‘Boriswave’ – was a form of human quantitative easing for which the country will pay dearly in the years to come. Many of the low-killed migrants who arrived in this period will likely cost the state more than they contribute in taxes.
From our borders to trade, from fishing rights to the giveaway of the Chagos Islands, British administrations have made an art form of capitulation. Our political elites lack the vision to capitalise on the opportunities that true independence can bring. There is so much an energetic state can do for its people in so many domains – energy production, trade, housing and industry, border control and security, to name but a few.
Just as Trump offered a free political tutorial to Starmer at his Turnberry golf course this week – educating him on the importance of migration control and national energy resilience – there is much to learn from his political strength. This half-Scots US president has demonstrated the value of robust national self-assertion. Alas, it is a virtue the British political class and ruling cultural elite simply do not possess. And the poor British citizenry pay the price.
William Clouston is leader of the Social Democratic Party.
Who funds spiked? You do
We are funded by you. And in this era of cancel culture and advertiser boycotts, we rely on your donations more than ever. Seventy per cent of our revenue comes from our readers’ donations – the vast majority giving just £5 per month. If you make a regular donation – of £5 a month or £50 a year – you can become a and enjoy:
–Ad-free reading
–Exclusive events
–Access to our comments section
It’s the best way to keep spiked going – and growing. Thank you!
