The United Kingdom is facing a fork in the road – continue with the status quo of low growth, high taxation and managed decline, or change path to a new era of prosperity, higher living standards and western dominance.
And the cause of this fork in the road? Donald Trump’s trade war.
The president yesterday signalled to the UK that it isn’t too late.
Tariffs are terrible economics but in this case, good politics.
Jacob Rees-Mogg says Trump’s threat poses Britain with a serious question
GB NEWS
Trump is right when he says there is a huge trade deficit with the EU. The EU puts an average tariff of 10 per cent on US cars while the US’s tariff is merely 2.5 per cent.
Similarly, the EU’s average tariff on agricultural goods from the US is 11.3 per cent, compared to the U.S. average of 4.8 per cent.
Donald TrumpREUTERSBut the EU also uses non-tariff barriers for US goods that often increase production costs for US exports, including on genetically modified organisms, the car industry, meat and pharmaceuticals. Infamously, the EU is terrified of chlorinated chicken, even though some foolish people are happy to eat chlorinated salad. In my view, it is the salad that is dangerous, not the chlorine.
In other words, the EU is an over-regulated super-bureaucracy, protectionist racket, which is more than happy to sell goods to the US but not the other way round.
This is where the UK comes in. We too, owing to our protectionist EU legacy, have a tariff on US cars.
As a gesture of goodwill, as Trump ramps up the trade war, we should immediately abolish this tariff.
Not only will it signal to Donald Trump that we have every intention of aligning ourselves with the high growth, low tax US economy, but it will make goods cheaper for you.
That is precisely why tariffs are bad economics but good politics. Donald Trump’s tariff regime will ultimately make imports more expensive for domestic consumers which lowers their standard of living and makes them poorer, but it will increase the US’s bargaining position.
The UK is in the perfect position to avoid these tariffs and offer free trade to the US, an avowed Brexit dividend.
But just in time for Trump’s trade war, Sir Keir Starmer is busy on his charm offensive, although in the Reverend Starmer’s case this may be more offensive than charm to the EU, attempting to reset our relations with the bloc.
He has always insisted the question of aligning with the EU or US is not a zero sum game, but it’s time for this chlorinated chicken to jump off the fence, go for growth and improve living standards across the United Kingdom.