Most obviously, they’re bad if someone else does them to you, by applying them to your exports to their country. Your trade is disrupted, your commercial potential is blunted, and the smoothest, most effective route between supplier and customer (which, generally, in a free market you will have chosen to take) is obstructed by man-made obstacles.
What’s more, the cost of lower trade is lower prosperity at both ends of the transaction. Human beings thrive on the exchange of goods and services, and the resulting creation of added value. Cut that off, and you hurt your own economy as well as those of your partners, while making your own people pay the bill to do so. A protectionist is someone who takes up smoking to give the guy next door a cough.
The damage extends to diplomatic relations and potential retaliation, too. In Afghanistan, 158 Canadian soldiers died after their country answered the United States’ call as an ally under Article 5 of the Nato treaty – yet now their neighbour speaks of punishing them as if they were an enemy, rather than a friend. The targets of Trump’s tariff raid are very likely to retaliate, as they have done before, with further economic consequences.
That quote illustrates the negative domestic impact of tariffs – “we take everything” means American consumers and businesses are buying things that they presumably find useful or attractive, which they will now either not be able to afford or for which they will be compelled to pay more to continue purchasing.
Starmer's leadership is about to be tested by a trade tug of war
Read MoreReacting to that with tit-for-tat is counter-productive – the equivalent of two men fighting one another by setting fire to their own wallets – but America does have a reason to complain.
There’s a rich irony that some of those denouncing tariffs also urged Sir Keir Starmer to explore rejoining the customs union on his visit to Brussels on Monday – given that the single distinguishing feature of any customs union is that its members shelter their economies behind an external rampart of, er, tariffs. That’s why it’s a customs union, not just a free trade area.
The facts here are highly inconvenient for that mindset. If you dislike tariffs, which you absolutely should, then the answer cannot be either Trumpist protectionism or EU protectionism. For all their other differences, whether you wear a red cap and shout “Maga”, or a blue and yellow beret and yell “Rejoin”, on trade at least you will find yourself wearing a variation of the same costume.
First, it could mean being forced to choose one or the other. Second, it could provide the possibility of gaining the best of both worlds. Or third, and worst of all, it might result in falling between the two grinding hulls and being squashed.
In the best-case scenario, the US and the EU both come to feel that they would benefit from exempting the UK from the policies they fling at one another across the Atlantic. Growth, which we are told is the Prime Minister’s top priority, will depend heavily on getting it right. The cost of failure in a world of rising tariffs would be huge.
Mark Wallace is chief executive of Total Politics Group
Read More Details
Finally We wish PressBee provided you with enough information of ( Trump has made his move. Now Starmer has a choice )
Also on site :