Sir Keir Starmer will dispute senior ministers on Thursday to study chaos of world trade triggered by the so-called “Liberation Day” of Donald Trump, while pushing a sigh of relief that Great Britain was spared the worst.
Starmer’s allies argued that the Prime Minister’s “calm” diplomacy with Trump had been “justified” by the fact that Trump imposed a 10% tariff in the United Kingdom, compared to a 20% rate on the EU.
The rate that Trump put on the United Kingdom, which has a balanced trade in goods with the United States, was the minimum it has levied from American trade partners. People like Australia, Brazil, Turkey and Singapore have also obtained the lowest rate.
Starmer hopes to conclude a trade agreement with Trump to further reduce this rate by 10%. But British officials recognize that Trump has established powerful economic and political forces that could be difficult to contain. “We are waiting for the administration to come back to earth,” said one.
João Vale de Almeida, the former EU ambassador to the United Kingdom, said one of Trump’s objectives was to sow the division between Britain and the rest of Europe and warned the danger it could succeed.
“The more concessions there are that Great Britain does to the Americans, the more difficult for the EU to live with it,” he told Financial Times. “The more you go on the American side, the more you create a distance from us.”
Starmer said he would not impose “instinctive” reprisals in the United States, even if people in Canada and the EU responded in kind to the previous cycles of Trump prices. The anti-Trump liberals want Starmer to form a “united front” with Ottawa and Brussels.
Vale de Almeida said he was convinced that Trump would ultimately conclude Great Britain an even better agreement on the prices that the EU, which, according to him, could create tensions if it caused a commercial and investment diversion.
Sam Lowe, leader in trade policy at Consultancy Flint Global, said that a possible field of tension-and a potential economic increase for the United Kingdom-would be if companies moved production to the United Kingdom to take advantage of better commercial conditions with the United States.
However, he warned that the uncertainty created by Trump has reduced the prospects for such relocations. “If there is a differential which is beneficial for the United Kingdom, the question of investors arises is” how long does it last? “” He said.
Lowe added that the rules demanding that the goods be sufficiently produced in the United Kingdom in order to benefit from the US lower price should, in theory, prevent EU exporters from simply shipping their finished products to the United States via the United Kingdom.
Any advantage for London of companies that would move production would probably be offset by the blow to 60 billion sterling pounds of British exports existing towards us, and the economic trail of the growth of the already stagnant GDP of the United Kingdom from a world trade war – Starmer’s tax plans have a razor margin for error.
Commercial experts do not expect Great Britain – unlike the EU – imposes “anti -dumping” prices on surplus products that could flood the world markets of China, Europe and other major areas of manufacturing due to American rates diverting goods from the American market.
“Could we take anti-dumping measures? I doubt that we would do it,” said Greg Hands, former conservative trade minister. The British economy is less based on the production of interior products than on expenses and consumption services.
But Hands said that Starmer could face other problems resulting from Trump prices that could complicate his efforts to “reset” relations with Brussels before a British / European summit in May.
He said that he could imagine a situation where American goods were cheaper in Great Britain than in the EU due to countermeasures imposed in Trump by Brussels. European consumers could go to London to buy American manufacturing products. Irish consumers could make a trip similar to Belfast.
“It could be good for the United Kingdom, but it could lead to tensions,” he said, adding that the French authorities could feel obliged to set up more customs checks for British return travelers.
“You can see how a certain gallic story could occur on the” perfidious albion “reducing his own agreement with Trump,” said Hands.
Starmer will begin to feel political warmth if his “fresh” response at Trump prices – in particular his refusal to impose reprisal measures – fails to offer new rapid concessions from the American president.
Commerce experts said that the British government’s decision not to announce reprisals against Trump’s prices had made the United Kingdom an aberrant value. China, the EU and Canada have responded so far to Trump prices.
Creon Butler, head of the global economy of the Catham House reflection group, said that the United Kingdom had a difficult balance to find as a small nation dependent on the United States for its safety, the reluctance of Starmer risked inviting requests for new Washington concessions.
“A number of countries – EU, China, Canada – have announced reprisals but then delayed taxation. There is therefore a way to do so and not to impose the measures. The question, if you do not retaliate, is” where do the requests stop? “” He said.
Butler added that the United Kingdom’s offer to dilute the digital services tax imposed on American technology giants has also posed political risks for the Starmer administration, which simultaneously imposes social cuts on patients and disabled.
Michael Gasiorek, director of the United Kingdom’s Commercial Policy Observatory at the Sussex University, said any Starmer’s decision to retaliate should be weighed with any economic effect of the United Kingdom prices that would be negative-and probably have little effect.
“The United Kingdom does not have substantial economic leverage when it comes to negotiating goods with the United States, so I find it unlikely that British reprisals considerably change the American position,” he said.
A “nuclear option” threatening to retaliate in financial services, where the United Kingdom has a surplus with the United States and could therefore potentially have an impact, has also risked leading to a painful counter-retraitity since 27% of the exports of British services go to the United States.
“Given the whims and changes in American policy, it seems to me reasonable for the moment to” stay calm “and see if an agreement can be negotiated,” said Gasiorek.
