A trade war between Donald Trump’s United States and the European Union could plunge the world into a 1930s-style economic crisis, former Conservative Chancellor Norman Lamont has warned.
The UK must resist pressure to side with the EU and instead continue trading with the US, he insisted.
Lord Lamont, who was Chancellor in the 1990s, also warned that plans to align UK safety regulations with the EU “will only incur the wrath of President Trump”.
President-elect Donald Trump has vowed to impose tariffs of up to 20 percent on global imports into the US from most countries after he takes office on January 20, as well as a 60 percent tariff on Chinese goods.
The EU is expected to respond with tariffs of its own, including fees on the import of Kentucky bourbon, Levi’s jeans and Harley-Davidson motorcycles.
But the UK could stay out of the fight, even though experts at Sussex University have predicted Trump’s tariffs could cost British firms £22 billion.
Lord Lamont warned of a repeat of the global depression of the 1930s, when unemployment shot up in the US, UK and Germany and the crisis fuelled the rise of fascism.
He said: “Protectionism and tariffs are very great threats to growth both here and internationally, as we learned in the 1930s.
“If President Trump proceeds with his dangerous idea of imposing more tariffs, I urge the Government not to join the EU in any tit-for-tat retaliation but to maintain an open trading system.”
And he highlighted the danger of Labour’s apparent plans to adopt EU regulations for industries such as AI, saying: “I urge them not to align with the EU on future industries such as AI when Europe so badly lags behind the United States in those areas.”
The Government’s Product Regulation and Metrology Bill, currently making its way through Parliament, will allow the UK to align with EU rules while Prime Minister Sir Keir Starmer has vowed to “reset” relations with Brussels.
Relations between the EU and Donald Trump’s incoming administration are also under strain following interventions from Elon Musk, the billionaire businessman who is due to lead a new government efficiency department in Mr Trump’s government and has praised Germany’s far-right AFD party.
The UK has so far refused to commit itself to joining any EU-led retaliation against US tariffs. Chancellor Rachel Reeves has indicated she hopes the UK’s “special relationship” with the US might allow a deal to be struck.
She vowed to “make strong representations about the importance of free and open trade, not just between ourselves and the United States, but globally.”
