This week saw, according to respected economics commentator Simon Nixon, “the end of the economic world as we knew it”, and he is not alone in that view in the aftermath of Trump’s tariff announcement. But this is a blog about Brexit and actually, from that perspective, much of what I wrote in the first section of last fortnight’s post about the framing of current events still applies [1]. So, too, do many of the questions posed within that framing.
This in turn reflects the fact that what has effectively happened in the last couple of months is that the Brexit ‘reset’ policy with which the Labour government came to power, and which in some rather ill-defined sense it has been pursuing since then, has become inextricably entangled with the changed geo-political and economic landscape created with such speed by the new Trump administration.
So whereas what used to be called ‘the reset’ denoted simply a UK-EU process, framed by what had happened since 2016, it now has a new meaning as both the UK and the EU, and the UK-EU relationship, seek recalibrations framed by what has been happening in the US since January, including the latest dramatic, but not unexpected, developments (which I will return to). As a result, it has become far more complicated.
The changed meaning of ‘the reset’
To see the significance of that change, consider the idea of creating a deeper UK-EU defence and security pact. This was always central to Labour’s original reset plans, going back well before the last election. And it was not an especially radical idea, since it was effectively a revival of the non-binding Political Declaration signed, though subsequently ignored, by Boris Johnson in 2019. As such, it was actually a good example of what Labour could legitimately call ‘the Tories’ botched Brexit’, in that the absence of such a pact wasn’t inherent even in Johnson and May’s Brexit and, again as such, was a prime candidate for the reset in its original meaning.
However, there is now much more at stake in that such a pact is not only more urgent but has become bound up with massive changes in defence posture and policy under way within the EU and many of its member states, especially Germany. At their most basic level, these changes are about Europe, as a continent, taking responsibility for its own collective security now that the US can no longer be relied upon. In parallel, that is now conceptually bound up with, even though it is formally distinct from, Anglo-French attempts to mobilize a ‘Coalition of the Willing’ to support a ‘reassurance force’ for Ukraine in the event of any kind of peace deal.
There are already quite a few moving parts within that, even before adding in the potential economic and regulatory aspects of any reset. And the nature of that addition has also changed. In the original reset, these aspects might have been seen as relatively discrete from that of defence. Now, with possibilities for integrated defence manufacturing and procurement having come to the fore, they are much more closely connected.
From this, some of the political questions which already arose have become more complicated. In particular, to what extent do, or will, EU and/or UK negotiators treat all the different components as being inter-related and therefore, potentially, susceptible to being traded against each other? To give one important example of what that means in practice, to what extent might a defence and security pact be contingent on a deal on fishing rights, or on the still unresolved matter of Gibraltar? There is also a swathe of issues which are due to come up within the next year under the existing Trade and Cooperation Agreement, for example energy security, to add to the mix.
All of this brings new meaning and importance to the UK-EU Summit to be hosted in Britain on 19 May. If it doesn’t lead to the announcement of a substantive agreement, it will, given the wider context of crisis, mark a major failure of, and for, both the UK and the EU. A wise article by former EU Commissioner for Security Sir Julian King makes the point that the best way of averting such a failure is to avoid seeking to create a single ‘grand package’. That is, it is vital to reach agreement on the most pressing issues, whilst creating future processes to address those which cannot be resolved.
On my reading, King’s deeper message is that, primarily because of Trump, the nature of the UK-EU relationship needs to be thought of in different ways from those which have obtained since 2016 or even 2020. In other words, to repeat the point with which I began, a global reset is already under way, and the reset of post-Brexit UK-EU relations is now bound up with adapting to that new reality.
More accurately, it is bound up with adapting to a new reality which is still in the process of emerging. Because as well as all the moving parts within the UK-EU relationship, those within the US’s relationships with the UK, the EU, and the wider world also continue to be in flux. This flux has two broad aspects but, in terms of how they impact on resetting the UK-EU relationship, they point in potentially different directions.
The moral collapse of the United States
The first aspect is the rapidity of the US’s ongoing descent into authoritarianism and, which makes it hard to document and make sense of, the chaotic manner in which this is happening. Much is being written about this, by people much better-qualified than me, so this is just a brief summary.
There is now a multi-fronted war against universities, with overseas students being pulled off the streets by masked agents, detained in legal limbo, and deported. Entire universities are being battered into submitting to government demands, extending to what can be taught and how. What may in the long run become most damaging are attempts to censor or outlaw scientific research which is deemed ideologically unacceptable.
Some of this overlaps with a ferocious onslaught on alleged illegal immigrants, including deportations to a hellish prison in El Salvador in defiance of court orders. It also overlaps with the attempt to erase all traces of ‘Diversity, Equity and Inclusion’ (DEI) in public and private organizations and even amongst foreign firms supplying the US government. Lest anyone think that is no more than a re-balancing of some of the wilder shores of ‘wokery’, it has extended to removing the names of black, Hispanic and female military veterans from the Arlington National Cemetery website, the list of those names including General Colin Powell, Secretary of State to George W. Bush. This isn’t a corrective to ‘political correctness gone mad’, it is simply mad.
The intimidation of universities is accompanied by growing intimidation of journalists, authors, lawyers, judges (£). The latter, in particular, but all of these developments, in general, are bound up with what is now widely acknowledged to be a wholesale undermining of the rule of law. This of course extends to the rule of international law, including renewed threats against Greenland made, in the stock manner of every aggressor since time immemorial, in the name of the intended victim’s security’. Indeed all the developments I have mentioned are sickeningly familiar from all the other cases of countries sliding into authoritarianism or even totalitarianism.
Hovering above all of this is the spectre of radical violations of the US Constitution, with the most egregious threat being Trump’s recent talk of finding a way to serve a third term in office. And lurking underneath all this is something which is perhaps the least consequential but, to me, somehow seems the most revealing: the throat-clenched anger revealed by the savage rudeness, casual cruelty (the ‘fun videos’ referred to in the link include those of shackled deportees being frog-marched to detention camps), and sheer depravity of so many of the regime’s functionaries and cheerleaders. What we are seeing is not just a maverick government but something far more profound and far more dangerous. Hatred has been unleashed and made legitimate.
So far as this first aspect of what is happening in the US is concerned, its potential impact on UK-EU relations is to make them closer and deeper. It underscores the point I made in a recent post that, in this new global divide Trump has initiated, both the UK and the EU are on ‘the same side’. Both have shared values in being broadly committed to liberalism and the rule of domestic and international law. In this sense, as I suggested in that post, Brexit is an anomaly and an incongruity.
The United States’ declaration of economic war
The second aspect of what is happening in the US and its relations to the wider world is the economic warfare it has unleashed with ‘Trump Tariffs’. As flagged at the start of this post, this has been the big story of this week, with the long-trailed announcement on Wednesday of the details of a blanket 10% tariff on all goods imported to the US, including from the UK, with effect from tomorrow. The EU faces a 20% blanket tariff, and several countries an even higher levy, up to the 54% imposed on China. Moreover, there was confirmation that imports to the US of steel, aluminium and motor vehicles from all countries, including the UK, have had a new 25% tariff imposed.
By any standard, this marks the beginning of an enormous economic shock. The full effects are difficult to predict partly because, as was seen earlier this year, Trump’s capriciousness means the policy might be altered in any direction, at any time. That capriciousness is itself partly because it isn’t simply an economic policy, as was underscored by the rambling speech about supposed American victimhood with which the new tariffs were announced, and the bizarre nature of the way they were calculated (£). As I noted shortly after his election, “trade policy for Trump is about beating his enemies … so there’s no point in thumbing through Ricardian theory on comparative advantage to try to understand [it]. But the corollary is that there’s no point in trying to frame responses in these terms.”
In particular, much of Trump’s trade policy apparently aims, and certainly has the potential, to provoke division, including between the UK and the EU. That is because of the different ways different countries have been treated, and also because of the possibility, and therefore the temptation, for individual countries to cut their own deals or make their own responses in the face of US aggression. So whilst those threatened may have shared values, they do not necessarily have (or perceive themselves to have) shared economic interests. Thus this second aspect of what is happening in the US could work against UK-EU relations becoming closer and deeper.
Back to Brexit
Specifically, the UK government, mired as it is in economic difficulties, may believe that Brexit is a lifeline rather than ‘an anomaly and incongruity’. Certainly the Brexiters are already crowing that Trump imposing a lower rate on the UK than on the EU represents a vindication of Brexit (they would do better to reflect on the mockery it makes of their former faith in ‘WTO rules’). They also believe that there is an even bigger potential ‘prize’ in the form of an exemption deal with the US.
Plainly the government does so too, having been seeking exactly that in recent weeks and, although it has not been successful, it claims that the effort is continuing, even hinting that a deal may be near to completion. Meanwhile, Starmer is insistent that there will be no immediate retaliatory action but that “all options remain on the table”, implying retaliatory tariffs if there is no deal, and has launched a consultation exercise with businesses about what these might consist of.
It’s worth saying that there is nothing inherently shameful about trying to negotiate a deal with the US, despite what some commentators and politicians seem to believe [1]. After all, the UK is not the only country which has tried and is continuing to try to do so, with examples including Canada, Mexico, India, and Japan. The EU, too, “would prefer to negotiate”.
The issue is, more, what happens if those attempts continue to fail. Does the UK then pursue a policy of being a non-combatant in the trade war? If it did so then, again, it would not be alone. It seems that this will be how Australia and New Zealand, both of which have ‘only’ suffered the 10% baseline tariff, will respond. The UK’s situation is different to those countries, though, in terms of its economic enmeshment with the EU. On the other hand, what happened if the UK’s attempts succeed? That would make it not so much a non-combatant as a defector.
The economic temptations for the UK to continue to seek an exemption deal, or to eschew retaliation without one are obvious. The political risks are equally obvious. Domestically, it is out of line with opinion polls, which would prefer closer links with the EU (but public opinion might be fickle if and when Trump Tariffs bite on UK jobs). Internationally, it may undermine or even destroy the developing unity with the EU and other countries, including those of the ‘Coalition of the Willing’ to support Ukraine (an illustration of the complexity of the moving parts in the new reset).
Bluntly, why would other countries want to get closer to, let alone ‘stand shoulder to shoulder with’, a Britain making weaselly deals with Trump even as Trump punishes their economies and even threatens their territory? In the process, any political kudos Starmer has garnered, both domestically and internationally, for his post-Trump leadership on defending Ukraine from Russian military warfare may quickly be lost if he is unwilling to defend the UK and its allies from US economic warfare.
Perhaps some would understand and accept it as a matter of UK realpolitik. For example, it is reported that “João Vale de Almeida, former EU ambassador to the US and the UK, said he did not expect the UK to retaliate in the way the EU was bound to”, although he added that “it was important that Starmer hit back in some way by criticising the way the US president used tariffs as a tool of policy.” But perhaps (and perhaps more likely) other countries will see it as one more example of Perfidious Albion and one more example of the British preference, come what may, to cosy up to the Americans. An interesting sub-question is whether, if the UK continues to fail to make a deal with the US until eventually and belatedly joining the EU and others in retaliations, that would be seen as scarcely any less perfidious.
Starmer’s choices
These considerations, amongst others, lead Guardian columnist Jonathan Freedland to make the case that Starmer should publicly admit and denounce the threat that Trump poses, rather in the manner that Mark Carney, the new Canadian Prime Minister, has done. Former UK Ambassador to the US Sir Kim Darroch has made a similar argument. Freedland suggests that, apart from anything else, doing so might also enable Starmer to escape some of the economic policy constraints the government faces, by presenting this situation as a national emergency. Another kind of reset, so to speak.
Of course Freedland and, undoubtedly, Darroch are well aware that the extensiveness of the UK’s defence, intelligence and economic ties with the US makes such a course highly risky [2]. That is also true of Canada, but Carney is in a rather different situation, firstly because he is about to fight an election, and secondly because the US attacks on Canada have been so extreme and so public that they can hardly be finessed away. So even if Freedland is right that, sooner or later, open confrontation will become unavoidable, there is every reason to think that Starmer will opt for it to be left until later rather than done sooner, and, meanwhile, try to walk the tightrope so as to avoid alienating anyone.
But that, too, has its risks, above and beyond those to relations with the EU, Canada etc. For, whilst failing to unequivocally oppose him in the manner of Carney, it is not clear that Starmer’s stance is enough to satisfy Trump anyway. For example, whilst it seemed as if the invitation for another State visit temporarily appealed to Trump’s grotesque ego, it was reported that the subsequent sight of King Charles meeting President Zelensky negated that appeal and fed a new resentment. The wider point is that Trump’s character isn’t such as to appreciate a tightrope act, he wants unequivocal fealty. In other words, it’s perfectly possible that Starmer, and therefore the UK, will end up alienating everyone.
I don’t think anyone, or at least anyone with an iota of political insight, imagines that Starmer’s choices are easy, or that any of the options are good. But choices have to be made, if only by default, and time is not on his side. In the absence of the quick completion of a deal with the US, the policy of not responding to Trump’s tariffs will soon come under pressure from industry and voters, as well as from opposition parties and some Labour MPS and ministers. Equally, depending on what is given away in return, a deal with Trump is likely to be controversial. Moreover, depending on exactly how things play out, there will potentially be some complex, and specifically Brexit-created, problems for Northern Ireland.
Most urgently of all, the reset with the EU cannot be allowed to drift, now that it has taken on its new meaning, and it is going to have to be substantively advanced by the Summit, which is just six weeks away. If it’s not now or never, then it’s very close to it. And although it would be naïve to expect moral outrage to play much part in realpolitik and statecraft, the immoral spectacle unfolding in the United States can surely not be ignored for much longer. Or, to put it differently, and perhaps better, realpolitik and statecraft ought to alert us to the fact that the immorality of what is unfolding in the United States, quite as much as the imposition of tariffs, represents a clear and present danger to our national interests and our way of life.
Notes
[1] As I explained in detail in a previous post, a ‘deal’ in this context means some kind of agreement for the UK to be exempted from these new US tariffs, not a comprehensive UK-US Free Trade Agreement (this is presumably why Starmer always uses the term ‘an economic deal’ rather than ‘trade deal’). It’s worth stressing, because I was struck that when this was discussed in parliament yesterday some MPs, including some Tories urging a deal and some LibDems urging caution about a deal, appeared to be utterly confused about the difference.
[2] This isn’t negated by growing concerns about the security risks of sharing intelligence with the US, which were brought into sharp relief by the SIGNAL Yemen raid scandal, because that doesn’t affect UK reliance on receiving intelligence from the US.
