John Rentoul answers your Trump tariffs questions from the ‘Brexit dividend’ to chlorinated chicken
Donald Trump’s declaration of “Liberation Day” – a dramatic unveiling of sweeping new tariffs on US imports – has reignited questions about America’s global role, its economic influence, and what it all means for Britain post-Brexit.With the UK hit by a 10 per cent tariff, compared with 20 per cent for the EU, some Brexiteers were quick to claim a win. But if being slightly less penalised by a volatile US president is the best economic case for Brexit, it’s a shaky argument. There’s still no comprehensive UK-US trade deal, and experts warn that the so-called “Brexit dividend” has yet to materialise.In a live Q&A for The Independent, I answered your questions on Trump’s trade war, the UK’s response, and whether Keir Starmer can steer a better course with the EU. We discussed soft power, chlorinated chicken, the single market, and whether China really stands to gain.What emerges is a picture of a world in flux – and a UK still feeling its way through the fog of Brexit and global disruption. Here’s what you asked during the “Ask Me Anything” event – and how I answered.Q: Trump calls this ‘liberation day’ – but is he actually pushing the world away from the US dollar and undermining America’s soft power?pundaA: That is an interesting question. I don’t think Trump is completely detached from reality, but he is certainly good at pretending that bad news is just a blip in the prelude to Making America Rich Again. I think that now he has impressed his voters with the idea that he is standing up for them against foreigners, many of the tariffs will be dropped, with Trump proclaiming huge concessions and unprecedented trade deals as cover. There was an interesting, if depressing, study of the effect of tariffs during Trump’s first term – they were mostly selective and short-lived, but they made a lot of his rust-belt voters slightly worse off. The study found that the voters worst affected were those most in favour of tariffs.Q: Time to talk with the EU and be nice to them this time, surely?CoulsdonguyA: Keir Starmer is talking to the EU and trying to be nice to them, because it made sense before Trump’s trade war to ease the friction on UK-EU trade as much as possible without rejoining the single market – and if we had rejoined the single market, we might have been hit by the EU tariff of 20 per cent, so there is a genuine Brexit dividend in the form of being hit less hard than the EU.Ministers have been pretty robust about chlorinated chicken and hormone-fed beef. Jonathan Reynolds, the trade secretary, said yesterday that the government would abide by Labour’s “clear manifesto position to maintain that regime” – namely food production standards.(Although I personally don’t have a problem with US chicken or beef, provided it is clearly labelled.)Q: How might the UK go about capitalising on this with our EU neighbours?MattA: It is an opportunity in the sense that the UK will be hit less hard, and may be able to mitigate some of that damage by having EU-based companies that export to the US move here, but it is the opposite of an opportunity in any other sense of the word!Q: Is there any point in the UK trying to negotiate with Trump?PaulKA: I think we should do both: negotiate and not retaliate. I think he will reverse on tariffs at some point, and if he needs a “great” trade deal to cover his retreat, that should be fine by us.Q: If rejoining the single market makes economic sense, why won’t Starmer act – especially with a huge majority and Brexit now a minority view?KerrimanA: A counterintuitive question, at a point when not being in the single market means the UK faces 10 per cent tariffs on US exports instead of 20 per cent! But generally it remains true that we would be better off in the single market, while, for some voters, sovereignty is more important than GDP.Politically, though, Labour trying to reverse Brexit would lose a chunk of voters without gaining any, because those who are pro-EU are voting Labour anyway – unless the Lib Dems can use the issue to force Labour voters to switch to them.Q: Is he a genius who’ll help the US at the world’s expense – or the opposite, bringing harm to everyone?FishingInTheRiverOfLifeA: Trump is good at selling a simple political message, which is that he is going to stop those “cheating” and “pillaging” foreigners from taking advantage of the US. How much he believes in the economics of protection is almost a meaningless question. It is worth remembering that British politicians such as Joseph Chamberlain thought that tariffs were a good idea, and the issue split the UK (and UK parties) for decades, even though free trade usually had the upper hand. Chamberlain thought tariffs were a terrific wheeze because they would raise a lot of money and allow the abolition of income tax – or so he thought.Q: If China play their cards well, could they come out on top in the end?pundaA: No. Everyone loses from a trade war. But in relative terms, China’s rise to world economic domination will continue. It does not need any action on the part of the Chinese government: Chinese companies will respond to market incentives and try to sell where they do not face tariffs.Q: Can you explain what tariffs we already levy on imports from the USA? Trump said 10 per cent – is that correct?NigePA: No, the 10 per cent is not correct. I have heard Jonathan Reynolds, the trade secretary, say that the average tariff the UK charges on imports from the US is 4 per cent. We impose tariffs on goods including beef, cars and denim jeans. Before Trump, the average US tariff on UK goods was about 3 per cent, according to the World Trade Organisation.Every respectable economist that I have seen has said that the so-called formula used by the USTR (US Office of the Trade Representative) is nonsense. Just because it uses Greek letters doesn’t make it formal economics. It is like a supposedly scientific equation in a shampoo advert. What the “formula” does is roughly relate the tariff rate to the size of a country’s trade surplus with the US – with a minimum of 10 per cent. So that countries that sell more to the US than they buy from it have higher tariffs. The UK imports about the same as it exports, which is why it is on the lowest rate of 10 per cent.These questions and answers were part of an ‘Ask Me Anything’ hosted by John Rentoul at 1pm BST on Friday 4 April. Some of the questions and answers have been edited for this article. You can read the full discussion in the comments section of the original article.For more insight into UK politics, check out John’s weekly Commons Confidential newsletter. The email, exclusive to Independent Premium subscribers, takes you behind the curtain of Westminster. If this sounds like something you would be interested in, head here to find out more. More
