The forthcoming trade war that Trump is intent upon is going to force Starmer to do something he hates. He's going to back either the US or the EU, because he can't fudge this one without imposing massive harm on this country. And he's also going to have to be the Prime Minister who finally says farewell to the ‘special relationship', once and for all.
This is the audio version of this video:
This is the transcript:
Kier Starmer has a choice to make. Is it the US or is it the EU?
The choice, of course, is about trade policy. It's one of those two that he is going to have to back because there is no other real alternative. We're out of the EU. We say we have a special relationship with the US, which is complete nonsense because it's quite clear that Donald Trump hasn't got a special relationship with anyone on Earth except himself. And we have to decide, therefore, where we're going to stand in the coming trade war between the US, which wants to impose tariffs on all imports into that country, and the EU, which is undoubtedly going to be a major target of those US tariffs.
It is just possible that Trump might want to pick the UK off in this trade war by offering us a trade deal with the US to get us to side with him against the EU. We would be mad to do so, and there are several reasons for saying that.
The first is that that will put us on the side of Trump, and who really wants to be on the side of Trump when Trump is, and let's be blunt about it, a neo-fascist? Why would we want to be in that camp? We are seeing the people he's appointing to key positions in his administration. It is obvious that he is going to apply a wrecking ball to everything that stands for the well-being of the US people, and why would we want to side with that destruction?
But more than that, our trade with the EU is worth a lot more than our trade with the US. So why would we want to side with the US when our nearest neighbour, with whom we do much more trade, is clearly more important to us, and therefore siding against them in this trade war, which might result in sanctions being imposed upon us if we side with the US in this whole shebang that is coming our way would result in serious economic harm to the UK, more than Trump could ever seek to impose in his way.
So, Starmer has to make a decision. Is he going to go down that old, boring, clichéd, let's have a special relationship thing, which led once upon a time to Tony Blair walking next to George Bush and pretending they were best buddies, which then led us into the whole debacle of Iraq, or, are we instead going to go for the more reasoned approach, which is to align with the EU, even though we all know that in 2016, in a moment of collective madness, we chose to leave the European Union?
We obviously have to realign with the EU. I'm not saying we've got to rejoin. We do have to look at how we can protect ourselves from trade tariffs and barriers, and that is going to mean that whatever Rachel Reeves and Keir Starmer say now, we're going to have to look about rejoining the single market. We're also going to have to look at rejoining the Customs Union because we won't be able to afford anything else if the UK is going to be able to trade in most of the world's markets, which will be those other than the USA.
Starmer has to get off the pot. The time has come for him to make a decision. It's either Trump or it's the EU.
There's nothing good in many ways about either decision. There are lots of things wrong with the EU. But on the balance of economic gain, he has to decide that the EU is the way to go. And that is something he's got to say soon because British business, British people, and those with whom we trade all need to know where we're going to stand on this issue. And that requires him to make a decision.
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Trump of course can only be President of the USA for the next 4 years, who knows what might happen after that.
Plus of course there may be political consequences of being seen to be too supportive of his regime either from a subsequent US administration or elsewhere in the world.
Never mind the short term, what about the long?
“Trump of course can only be President of the USA for the next 4 years”
Trump only has two years. Trump will have major problems come 2026.
There is already buyers remorse with regards to the true impact of tariffs seeing the light of day, Matt Gaetz and the Dr. Oz Person.
FYI: MAGAts HATE Oprah Winfrey and Dr. Oz owes his WHOLE career to Oprah Winfrey. Of course this a ridiculous basis for any hate but MAGAts (not Republicans as a whole but the subset that took over the party) are pretty ridiculous themselves. Many MAGAts are not going to be happy when when their lawncare person and domestic care (house maintenance and childcare) person are rounded up and detained for deportation. This discussion is already happening in Florida as people are now claiming they did not know that people they currently employ for cash are in the USA illegally. As Dave Barry, of the Miami Herald, would say, ‘I am NOT making this up”.
I think you’re right
Not to mention when the cost of their favourite (imported) products goes up.
Its gonna be messy
That’s an astonishing assumption to make. El Presidente may rule a bit longer, and who knows who his successor will be if ‘democracy is fixed.
I suspect that Labour will veer towards Trump. The lure of a very one sided US trade deal will result in the UK turning away from the EU.
I agree.
There is a headline in the Guardian I saw today: ‘Shadow chancellor warns Reeves of getting closer to EU’. There is nothing that scares and then stops the current (right wing) iteration of Labour than Tory and their media attacks on them.
Very sadly and tragically, I think that a Trump ‘deal’ will be entertained, because it suits the Tories interests (see above), and Labour have little backbone to face them down.
(Mind you, a crumb of comfort (if there is one), is that Trump will only be president for four years, and trade ‘deals’ take a long time (see Nick Dearden’s excellent work).)
I have this question many time; If the UK (England) does not want a trade deal with North America (NAFTA is a package to some degree) or a trade deal with EU, who do they want a trade deal with?
Vanuatu
A better trade relationship with the EU would be good – even essential – whoever is in the White House. Re-joining the Single Market should be the aim – yes, I know “we might as well never have left” will be the cry… but we did leave; from here, re-joining the Single Market is the best strategy. We won’t get a formal “say” in the rules but that is not a disaster – given our track record, having other folk make choices for us might be a good thing! Besides, given the imperative to cooperate on defence (and our outsized role in it), we will have influence in other policy areas.
Having said that, there is no need to make a public song/dance on this and antagonise the US… or Brexiters. We just need to get on with all the groundwork that needs doing – and do it now.
The UK (the poodle) has a long & deep “relationship” with the USA (the master). One of the things worth having that the poodle still owns is the NHS. The master has long wanted to own this. You have written the article as if the poodle was not influenced by what the master wants. This is not the case. As I write, the poodle gov/LINO will be lobbied with sweet words and promises. NHS privatisation will continue apace & linked to less bad trade conditions for the poodle which, in the case of the City of Parasites, will relate to finance markets.
An amusing blast from the past: when Glastone proposed to Vicky, a Lordship for Rothschild (then a significant force in the City – he was, after all its MP), she demurred, saying that “titling a Jew would raise antagonism and furthermore it would be unseemly to reward a man whose vast wealth was based on what she called “a species of gambling” rather than legitimate trade” (wikipedia extract – Lionel de Rothschild). That was 150 years ago – how times don’t change.
Thank you, Mike.
I live in mid Buckinghamshire, aka Rothschild country, and briefly worked with their firm.
From 1865 to 1922, a Rothschild represented the constituency. The family remains prominent and has begun to put its five arrows to denote ownership of estates.
“The family remains prominent and has begun to put its five arrows to denote ownership of estates.”
Do not understand this statement. What are the ‘Five arrows”?
Past of their heraldic crest
Yes, we really still are that feudal
If Starmer wants ‘to take the world as he finds it’ all we will get is a fudge.
Dollops of it.
The EU might be hurt by tariffs too so maybe Starmer will go with the EU to as a mutually beneficial option. But what might happen if the UK is put under pressure to take U.S. goods with totally different standards to the UK/EU? The whole thing could become a right mess – are those free ports still going to be finished? It looks like chaos to me, and knowing Starmer, I see a state retreat with consumers being thrown to the wolves as we are already being.
I doubt v much if Starmer’s current batch of (election focussed) special advisers (Morgan McS etc) have the ability to consider anything other than “what will please 2019 Labour voters who went Tory?”.
Which is quite worrying really.
The decision to leave the EU in 2016 was at the time a foolish, retrograde act of self harm. After Trump’s election victory and the policies his administration intend to implement leaves the UK badly exposed. Brexit (specifically the current version with most of the UK outside the Single Market and Customs Union) is now indefensible and if Rachel Reeves is so eager to deliver growth then one of the best ways to improve the prospects of the UK economy is to become more aligned with Europe – our nearest and most significant trading partners.
The Labour government in its first months in office have emphasised how they are not afraid to make tough choices. As evidenced by a number of their economic policies (winter fuel allowance and child benefit) they prefer to offload their tough choices to the most vulnerable who will have to make real tough choices between heating or eating.
Keir Starmer and other members of his government has so far displayed a concerning lack of conviction, bravery and imagination whilst acquiescing with those with power and prevailing dogmas and orthodoxies. I suspect well some incremental movements towards Europe but not enough whilst at the same time Keir Starmer will very likely try to desperately keep the so called special relationship with the US alive.
In Scotland, with independence on the back burner, I’d like to see the Scottish government take a stronger stance in trying to get Scotland back into the single market (similar to the deal Northern Ireland currently enjoys). While Scotland trades more with the rest of the UK than Europe I believe we export more goods to the EU. This has harmed the Scottish economy and certainly wouldn’t be helped by Trump’s tariffs. I would like to see the Scottish government tie closer European alignment with calls for enhanced devolution/devo max (particularly with regards to tax, energy, migration and employment law) and at the same time lay out a vision (preferably social democratic) of how those powers combined with access to the European single market can improve our economy and well being. Unfortunately, like the Labour Government, I can’t see the SNP being bold enough to act.
In the weeks since the US election one of the best summations of Trump’s win and the underlying factors behind it was provided by philosopher Michael Sandel. https://m.youtube.com/watch?v=Um017R5Kr3A&pp=ygUIQW1hbnBvdXI%3D
With Keir Starmer seemingly hell bent on being a caretaker Tory PM with a desire to keep the flame of neoliberalism alive I fear the UK could be ripe for further right wing populism or worse. If the Labour government carry on this way then I wouldn’t be surprised if Keir Starmer ends up being remembered as an enabler of fascism in the UK – like a British Paul von Hindenburg.
Thanks
Your comments really chime with my thoughts, I just wish that I could be as concise and articulate in my discussions with friends. Thanks.
Thank you, Richard.
This post is timely as, yesterday, I attended a conference in the City and heard from erstwhile colleagues, trade body and professional services. Three sessions, opening remarks by the trade body chairman and adviser to the consultancy (and ex Merrill Lynch board and Bank of England court member), Basel (bank safety and soundness) and ESG, addressed the issue.
On the way home, I was wondering how to share the tidbits with you, so Richard’s post is ideal.
The chairman and his trade body colleagues said they had not anticipated how receptive to the City Labour would be in government and how keen the government is on the City, recognised by the government as a strategic sector, to deliver its agenda and how much contact they have with the chancellor, three meetings in the past month alone.
Slowly, but surely, the remainer City is turning against the EU and no longer interested in any form of rapprochement. Only 15k of 90K jobs have been lost. Threats to the City like moving clearing and portfolio management from London to the EU will take 10 – 15 years to achieve. This appears to Starmer’s view, too.
The City and government recognise that the UK is caught between Trump / the US and EU, but reckon that the UK, outside the EU, can ally with eastern Europe and the Netherlands to promote free trade and isolate a Germany on its knees and a France obsessed with strategic autonomy (“protectionism”). It was implied that if the UK has to choose, a deal with the US would be preferable, but it was recognised that farming and food production, not health, would be causes for concern.
(I have not heard so much wishful thinking, especially that the non member UK can mobilise the EU against members France and Germany. I also noted that there’s a lot of Trump Derangement Syndrome as the Dixiecrats could have implemented and / or reinstated banking rules, but chose not to, and Biden kept Trump’s tariffs. There was no mention of the BRICS and global south / zone b.)
The trade body said that the government had accepted 90% of its recommendations on banking rules (on capital, consumer protection and senior manager accountability), i.e. rolling back the reaction to 2008 (“self harm”), and wants the City to fund net zero etc., implying that the EU would put the City’s prominence and influence at risk.
Last, but not least, the City grandee reckons Britons are paid too much.
It was shocking to hear the extent that Starmer and Reeves need the City to do their thinking and even some of the diplomacy.
Over supper with my parents, I told them the above and how much the government is reliant and wants to rely on the City. Mum remarked that yesterday the local library felt in a day care centre for the elderly escaping the cold. Library staff went to buy supplies out of their own pockets to feed the visitors.
@ Richard and readers: Please read my comments in conjunction with this Naked Capitalism post, https://www.nakedcapitalism.com/2024/11/the-brics-a-geopolitical-challenge-overlooked-by-the-european-union.html. Please scroll BTL for comments from Aurelien (retired Foreign Office and NATO official teaching in Paris), Froghole (retired Treasury official and amateur historian) and Paul Greenwood (British automotive engineer working in Germany).
Let me sound like a broken record: If you are able to leave this country, please do so.
Thank you
Noted
The BRICS dimension is important – and I note the comments re the EU.
Well, that made cheery reading. The critique of our structural weakness in raw materials could be extended to manufacturing. I still believe that Britain’s failure is the most egregious, and the most culpable. I never believed (from before 1973) that Britain chose to join the EU except to undermine it, from the inside; having failed from the outside; and eventually found that the best way to do that, was to leave. Even the discussion in your link implies a degree of old-fashioned balance-of-power playacting. Everybody needs to grow up.
Suggesting we all leave Britain, or Europe isn’t an option; even in morbid jest.
Just this morning the government issued a response to a petition of people asking to rejoin the EU. I don’t want to comment on that petition itself, but the response is interesting:
https://petition.parliament.uk/petitions/700005?reveal_response=yes#response-threshold
They explicitly state in their response that ‘we are not rejoining the single market or customs union’, and yet in the next paragraph they say they ‘will now work with the EU to identify areas where we can strengthen cooperation for mutual benefit, such as the economy, energy, security and resilience. We have been clear that the trading relationship can be improved’.
If the UK wants ‘cooperation and mutual benefit’ and ‘improved trading relationships’, it does seem like that’s exactly what ‘single markets and customs unions’ were built for. I think this response signals a dragging of feet and a refusal to accept the obvious. I pessimistically anticipate we will end up spending a lot of time arguing over minutiae of how to access the EU’s market, all the while hurting UK business, and end up with something close enough to a useful trade access deal just before the next US election cycle begins.
I agree the US should no longer be a priority. Any pretence that we might have a special relationship with trump is nonsense. I would argue that he has closest ties to Scotland of any part of the UK (family and business interests) and yet when he was last in power he put up massive tariffs on one of Scotland’s biggest export products, whisky, all because he got in a spat with the EU and wanted a trade war. Past evidence tells us he cannot be trusted, and he seems to be signalling he will be even more dangerous this next time round.
The facts speak for themselves, and support the conclusions of the Blog. I use slightly different time periods for the EU/US comparison, but only marginally different, and I surmise it does not seriously distort the comparison.
In 2023, UK exports of goods and services to the EU were £356 billion (42% of all UK exports). Imports from the EU were £466 billion (52% of the UK total). Source: House of Commons Library, ‘Statistics on UK trade with the EU’ (August, 2024).
Total UK exports to United States amounted to £188.2 billion and Total UK imports from United States amounted to £116.1 billion to end Q2, 2024. Source: Department of Business & Trade ‘Trade and Investments Factsheet’ (November, 2024).
Read them, and weep. Exports to the EU are almost double UK exports to the US, and that is after the huge post-Brexit loss of trade. The same applies to imports, that are almost four times higher from the EU compared to US. I suspect that underneath this is Trump’s judgement that there is more in a trade deal for the US than the UK; but in US terms it is not economically very significant, which gives a major additional advantage to the US in negotiation.
In short, the UK is in a quite dreadful place; all self inflicted through Brexit. Brexit remains an act of insanity that frnakly cannot be covered up, because it is leaking out everywhere through the economy.
Thank you and well said, John.
Unfortunately, the people who do the thinking for Starmer and Reeves are not suffering, don’t care and see opportunity in being outside the EU and immiseration. The only person who, I think, prefers a rapprochement with EU, but only so that the UK amplifies its influence, is Blair, but his owners / donors are largely anti-EU, American big business, or agnostic, Asian autocrat.
Further to mentions of the single market, let me share a story about Corbyn:
As late as the Monday before the December 2019 election, Corbyn went to Brussels to meet Barnier. A Norway plus deal was under discussion, including an idea from me relayed to Corbyn’s team by a friend and former colleague, also secretary to Corbyn’s constituency party, to resolve how the EU could be assured that UK regulators were supervising the City to their satisfaction in return for EEA access. My idea was to use the college of supervisors that all banks operating internationally have and are coordinated by home state supervisors and involve host state supervisors and have these colleges meet at Basel for banks (and Geneva for insurers), not in the EU.
Norway is a member of the EEA, so has market access, but no say on EU rules. A Norway plus deal would have recognised that the UK is not Norway and given the UK some influence on EU rulemaking.
The other thing about Corbyn is how often he and May met privately and how they hoped to have BRINO (Brexit in name only). The pair got on better than imagined.
One hopes the remainer useful idiots who sabotaged Corbyn are made aware of how they f’d royally, not that many, to be honest, care about the EU. It was all about Corbyn’s left wing agenda. Another thing about many remainers, most know little about the EU. Corbyn’s more nuanced approach was not wrong.
There is a third option: do a trade deal with China. Continue to import all our stuff at cheap prices from china eg electric cars at cost without tariffs; uk citizens enjoy at cheap prices like US grain of yesteryear; and then rebadge and export to the rest of the world hoping for a blind eye and a good deal. If the US and the EU dont like it slap import duties on.
It will be a rough ride but somehow I think the uk has boxed itself into a corner and needs creative solutions.
“rebadge and export to the rest of the world hoping for a blind eye and a good deal.”
That is really shifty, but is so British. We were doing it two hundred years ago (over two hundred years ago we were doing it, with slave labour in the colonies); import from our bullied and filleted Empire, rebadge and re-export.
Even the term you use for this is a rebadge operation; “creative solutions” (it makes something really cheap sound cutting edge).
Thank you Colonel Smithers. The UK is well and truly being led down the drain by those who know best. It’s understandable why you want out.