Donald Trump’s latest tweets are a wake-up call for Brits still dreaming of the “glorious joys of free trade”, as Liam Fox used to say. If the UK is to forge a trade policy independent of the EU, the manifest priorities are the US and China. The rest of the world is either already in free trade with the EU, or in negotiation with it (India and Brazil), or of trivial importance nowadays for the UK.
So back to America. Trump’s first move last week was to slap on a 25% steel tariff and a 10% aluminium tariff on national security grounds, applied to the whole of the world, including even its closest and deepest free trade partner Canada. So the chance that post-Brexit Britain would hypothetically have got preferential treatment is close to zero.
When the EU indicated that it is preparing countervailing measures, if the US indeed goes ahead with these measures, Trump tweeted that the EU would face sanctions against its motorcar imports from the EU.
This is gross would-be bullying. But it may not work, since the EU and other major trade players could further retaliate with force that would hurt the US badly. The EU is an equal trade power to the US. The UK on its own would have no such power.
Brexiters also need to understand that trade negotiators are very loath to do sweetheart deals with close friends, because that creates precedents which can undermine more difficult negotiations with more important partners. It is enough to mention the dreaded chlorinated chicken that popped up in Liam Fox’s visit to Washington last year, to remember that negotiations over the terms of agri-food trade would also face brutal lobbying pressures on the US negotiator, even before factoring Trump into the equation.
How about China? The EU does not propose a free trade agreement with Beijing, since China’s state-owned enterprises are hugely important and do not operate on normal market rules. In addition, Beijing has never made a meaningful services agreement with a major world player. Brexiters should consult the remains of the UK’s steel industry on how they would fare, given that Chinese excess capacity in steel is a hundred times more than the UK’s total capacity.
Brexit doesn’t pave the way for the glorious joys of free trade. It sets us up to be bullied by the big boys. Trump’s tweets tell us why.