So, now we know. Donald Trump’s blanket tariffs will be set at 10% for the UK, with 25% on autos and auto components. Other countries certainly fared worse but, for many US working people, these old-style protectionist tariffs will mean higher prices, job losses and broken promises – and they will be left to pick up the tab.
A lot depends on how business, the markets and Wall Street react to the internal pain the tariffs will cause, and on how voters will respond.
It’s one thing to boast about how a shortage of eggs was resolved, but entirely another when manufacturing jobs are lost and workers’ ability to secure decent pay rises and contracts are damaged beyond repair.
Make no mistake Trump is attempting to re-industrialise the USA using early 20th century economics.
The idea that overseas companies (and their ‘kings and queens’) will be queuing up to build new factories in the USA based on an economic policy explained on a Eurovision Song Contest-style scoreboard is preposterous.
Trump of course appears not to care less if US consumers and business suffer.
Trump’s punishment tariffs
Wheeling out hard hatted manufacturing workers who still believe that the age of miracles is not yet dead, and that German and Japanese car plants and manufacturing facilities will re-locate to the USA and allow them to unionise again is for the birds.
There will be no turning the clock back.
Trump is wedded to tariffs as an economic and political weapon, or to punish those he doesn’t like.
He believes, against all sensible advice, that higher import tariffs are good for the US economy in the long run. Although, as John Maynard Keynes said, back in 1923: “In the long run we are all dead”.
Working out a coherent tariffs policy can’t be done overnight with the sweep of Trump’s Sharpie pen.
For example, an investigation launched in early 2024, under the Biden administration, into alleged unfair Chinese trade practices in the maritime industry took months to complete – and even then, said the Cato Institute “delivered a flawed final product”. The Cato Institute also pointed out “performing a similar evaluation for every industry, policy and country (even just some) would take years, not weeks – if it were possible at all”.
There will be a need for staff to implement a tariff policy that currently lacks detail, and one which is likely to change from day to day. The mass dismissals of federal staff will make the task even harder to complete.
At best, Trump’s tariffs are guesstimates
He is wrong about the economic benefits of tariffs and believes his own propaganda that United States will be “so rich, you’re not going to know where to spend all that money”.
Trump is an old-fashioned protectionist who believes that the road to a prosperous future is to divide the world, in order to create bulging US government coffers through tariffs – even if that causes pain in his own country.
The US Congress will do little, the Democrats are shattered, the unions face the end of collective bargaining in the public sector. Others see diminishing membership through job losses elsewhere, with no ability to secure union rights at any company that at some point decides to build manufacturing facilities in the USA.
Americans voted for lower prices in November 2024, and some still believe that the steel mills, mines and manufacturing plants will reopen, and the USA will return to the ‘swell years’ under the guise of cobbled together trade policy. What Trump will deliver is something totally different to what the US voters expected.
As for the UK, our auto sector, notably in the West Midlands, faces a grim future with many potential job losses anticipated to be announced before long. And as for the UK government’s anxiously anticipated ‘prize’ of a US trade deal? Read the small print.
