European Union is about to hit the United States with tariffs on Harley-Davidsons, snowploughs, négligées and communion wafers just as the war in Ukraine reaches a critical juncture. Europe’s threat to slap tariffs on American jeans, vapes, chewing gum and hundreds of other items comes as President Trump swings a wrecking ball at global steelmakers – right as the UK Government scrambles to save Britain’s steel sector from collapse.
The EU and America stand on the brink of an all-out trade war with Britain stuck in the middle, clinging to hopes Trump may decide to strike an “economic deal” with us. What used to be called “the West” looks in a state of division and downright chaos. This will delight the Kremlin.
During the Cold War it was accepted as gospel truth it was important for allies on either side of the Atlantic to flourish. We had to prove that free markets offered people a better standard of living than Communism. But in Trump’s era of “America first” that commitment to mutual prosperity seems quaint. Those around the US president believe European states have grown wealthy and showered their populations with benefits while failing to pay a fair share of defence costs.
We are in a new era of competition and a trade war threatens to hike up prices, kill jobs and fuel inflation in both Europe and North America. China will point to the spectacle of feuding democracies as proof such governments are hard-wired towards irrationality.
To be fair to Trump, he believes he is fulfilling his sacred duty to stand up for his own people. He wants to force companies selling products to Americans to make more of those products on American soil. Just as Boris Johnson longed to level-up Britain’s Red Wall, he wants to revive the so-called Rust Belt and boost the fortunes of Americans for whom globalisation did not usher-in a golden age. He is on a mission to “level the playing field”.
American steelmakers have intense grievances, claiming Mexican rivals have imported cheap Chinese steel and exported it to the US after making minor alterations as if it were made in Mexico. President Biden targeted such steel with tariffs and now Trump is going further.
Trump’s enthusiasm for tariffs may dim if it fuels US inflation and ordinary Americans are enraged by rising prices. If he changes course it will be in response to domestic fury rather than denunciations from Ursula von der Leyen.But America will be weaker in the long-term if it antagonises its Cold War allies and these countries decline. Britain will be a less effective partner if our economy crumbles further and we cannot support a world-class military; the complete collapse of our steel-making capacity would be a terrible wound to our national security.
Not that long ago, in 2022, then-Foreign Secretary Liz Truss called for the G7 to “act as an economic NATO, collectively defending our prosperity”. She declared in her Mansion House speech that if the “economy of a partner is being targeted by an aggressive regime we should act to support them,” adding: “All for one and one for all.”
It is impossible to imagine Trump delivering such a clarion call for solidarity. But if he continues to foment trade wars with longstanding allies he will shred any claim to be “leader of the free world”.