It was a rollercoaster week. First, Universal Studios dropped new plans to bring its first thrill-packed ride-fest to Bedford. Then President Trump sent global markets into a vertical drop with a tariff tempest that wiped out trillions of pounds. It’s not quite a Covid-sized asteroid hitting the economy. Nor even a Great Financial Crash sized meteor. But it’s not far off.
Despite a last-minute reprieve for some nations, the U.S. ends the week with tariffs higher than the infamous Smoot-Hawley laws of the 1930s — which helped trigger the Great Depression. And, as history teaches us, when America sneezes, Europe catches a cold. This tariff tantrum is going to hurt. It will hit jobs, squeeze wages and bruise our economy. So we need to set a new course to ride out the storm. But if we seize this moment, this crisis might well be the making of us.
These are anxious times for working families. At Jaguar Land Rover in my own patch, I know first hand how worried workers are about the future now that shipments of Range Rovers to the US have ceased.
This weekend, workers all over Britain will be anxious about the months ahead. That’s why, over the last fortnight, the Business and Trade Committee has been in intensive talks with business leaders and policymakers around the world about what free-trading nations like ours should do next.
And in talks in Japan — one of the world’s great manufacturing nations, a close ally and a major UK investor — the outline of a trade war toolkit began to emerge.
First, keep talking. Keep America in the room. As we’ve seen this week, President Trump’s plans can turn on a dime. But because the UK got talking to Team Trump well before the American elections, we’re already in the VIP room — at the front of the queue of some 70 nations waiting to cut a deal. And we’ve got leverage.
America wants to stay ahead of China in the tech race — they know technology is now the defining power in superpower. The UK and the US are the world’s only trillion-dollar tech economies. That gives us something serious to trade with.
Second, be ready — but cautious — about retaliation. Ministers were right to consult businesses quickly. But let’s be clear: while retaliatory tariffs might feel good for a moment, they are likely to do more harm than good.
The Office for Budget Responsibility warns that hitting back with tariffs of our own could almost double the economic damage. That’s not a win — it’s a self-inflicted wound.
Third, lead a new Free Trade Front. We need to forge a modern League of Free Traders — smaller economies that, together, account for about a third of global GDP.
And the UK is uniquely placed to lead. We’ve got a one-of-a-kind Brexit trade deal with the EU. And we, alongside Japan, are the largest economies in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a massive free trade pact linking 11 Asia-Pacific countries including Canada and Australia.
We should strengthen both alliances. A serious reset with the EU could include deeper defence ties, cooperation on North Sea wind power, a cut in export red tape, and stronger links for our services sector.
That could generate enough new growth to offset the impact of US tariffs. Meanwhile, expanding the CPTPP — starting with Indonesia, a $1 trillion economy — could open up an even bigger, nearly tariff-free market. Taken together, the EU and CPTPP economies are much larger than the US —and we’re in pole position to gain from both.
Fourth, get serious about industrial support. That means a bold package for manufacturers, small firms, and our services superstars. Use the power of public procurement — especially in defence and the NHS — to buy British.
Slash industrial energy bills. Give businesses the flexibility to train and hire for the roles they need. Cut business rates for smaller firms. Everyone else is backing their own — so we must level the playing field.
Finally, we may need to rethink the national budget. It’s too early to tell how much damage Trump’s tariffs will do to the Chancellor’s forecasts.
Credit where it’s due: the Chancellor prudently rebuilt £10 billion in fiscal headroom at the last Budget. Right now, forecasts don’t look bad enough to wipe that out. But, as we’ve just seen, global shocks can land fast and hard. We need to stay nimble.
It was Ronald Reagan who once said that ‘protectionism is destructionism’. Today’s American President has forgotten that lesson. But if we seize this moment, this crisis might well be the making of us.
