Stick with free trade - negotiate, don’t retaliate, start praying
Britain should avoid hitting back in the trade war launched on Liberation Day.
This is Iain Martin’s weekly newsletter for subscribers.
How did you spend Liberation Day? Out partying with the crowds or at home quietly with family? The highlight was - obviously - the traditional President’s Liberation Day Speech, filmed in his back garden this time, where he delivered a series of bracing points. We have all been ripping off his country and it stops here, he said. The show had a reality TV feel to it, appropriately enough, as Donald Trump produced a board marked up with the tariffs that would be imposed on individual countries.
You know what happened next. On Thursday morning the markets fell over and struggled to get back up again. On Friday they fell some more.
To the astonishment of traders and investors who should not have been surprised, Trump had actually gone and done what he said he would, in defiance of the widespread expectation that he would water down the tariffs or go more slowly. This was the theory pushed by several Trump-adjacent analysts late last year. I was among the commentators who highlighted these reports which claimed Trump would proceed carefully. An increased tariff in year one with a set of demands of trading partners and threats of more to come if they failed to comply, was the theory.
Now we know - from Trump’s approach since the turn of the year - that this is not like the first term. This time the President feels himself to be unconstrained, with no advisors or members of his cabinet blocking him. That means we all get Trump unleashed, free to implement what he has always believed about economics and trade.