How to Avoid Trump's Tariffs

4 easy steps

When Liz Truss went to meet with President Trump in his first term we sent her off with a bottle of Scotch (the message being: stop putting tariffs on this fantastic drink). Trump’s gift to Truss was a copy of his own The Art of the Deal signed with ‘To Secretary Truss, Let’s get a great deal, Donald.

Trump is now back and while he has (kind of) set out what he’s going to do Mexico, Canada, and China on tariffs and trade, he has been far less clear what he plans to do regarding the UK.

As I’ve written before, the UK is less likely to face Trump’s tariffs given that the US does not have a trade deficit in goods with the UK. It does have a deficit in services trade but Trump doesn’t really care about that. As such, the UK will be less of a target than the EU which very much does have a trade surplus in goods with the US.

However, there is still a chance that Trump might decide to target UK goods in certain sensitive sectors such as aluminium, steel, and Scotch. Alternatively, he could just decide to treat the UK the same as everyone just because Peter Navarro feels like it. All of this is obviously less than ideal and so we should try to avoid it. Regardless, it would be a good idea to strengthen trade ties with the US.

The UK government can probably avoid tariffs and strengthen ties in the hope of paving the way for a comprehensive trade deal with the US in four easy steps (maybe).

Step one

Agree to buy less stuff from China. I’ve written before on why the UK’s real choice will not be between the US and the EU but rather between the US and China. Given that China is ruled by the evil CCP which violates international trade law at every opportunity the choice is clear. The UK should aim to side with the US even if that does mean doing less trade than China.

This is something which Trump’s team might insist upon as part of restarting trade talks or for avoiding tariffs. Regardless, the government should be prepared to show that it shares Trump’s concerns over China by promising to be less reliant on it. Perhaps the best way it could do this now is to make it clear that it intends to block China from joining CPTPP and fast tracking Taiwan’s accession.

Step two

Trump has frequently threatened to withdraw from NATO and has expressed his anger and frustration at European countries for not spending enough on our own defence. It really annoys him and he kind of has a point.

As such, the UK should announce that it intends to increase its Defence Budget. It should be doing this anyway given the threat posed by China and Russia and so Europe needs to be able to compete militarily with Russia and also to be able to see off other threats. The fact that this might endear the UK to Trump is an added bonus.

Step three

Commit to using some of that money from the increased Defence Budget to buy equipment and technology from US contractors. Specifically it should offer to purchase at least some of it from SpaceX.

When it comes to trade deals there are many types of ‘deal’ in Trump’s mind. He doesn’t really care too much for traditional FTAs but instead views trade as a zero sum game through the eyes of a salesman. As such, any deal which sees another country buying products made by American manufacturers is a ‘win’.

The UK should give Trump a ‘win’ by purchasing the equipment we need. What is more, we should buy it from SpaceX. The reason for this is fairly obvious: Elon Musk is very close to Trump. What is more, given that Musk is less than enamoured with the UK government at present, this could be a good way to build bridges.

Step four

Announce all of this as part of a State visit. Trump is an anglophile and clearly adores the Royal Family so the government should give him the works. State banquets, a ride in a gold carriage, playing golf with The King, whatever. He’ll lap it all up and it is likely to go a long way to helping the relationship get off to a good start.

So, there we have it. I know this seems like pandering but all it would really involve is doing things which the UK should already be doing (taking a tougher stance on China and increasing the Defence Budget). This could then be used as starting point for a more comprehensive trade deal but even if that turns out to be a non-starter then at the very least it’s likely that the UK will strengthen its relationship with the US.

Thanks as ever for reading!