How Trump's tariffs threaten UK identity

Editor's note: David Henig, a special commentator for CGTN, is the director of the UK Trade Policy Project at the European Centre for International Political Economy. The article reflects the author's opinions and not necessarily those of CGTN.

There was a small sigh of relief in the UK when U.S. President Donald Trump finally reached the country in his tariff scoreboard revealing the lowest possible number of 10 percent. Limited, because with 25 percent on steel, aluminum and cars, this still adds up to a hit to an economy struggling for growth. Pharmaceuticals tariffs may yet come, adding to the issue.

As one of the strongest allies of the U.S., and with Prime Minister Keir Starmer having developed a decent relationship with Trump, there had been the hope of some sort of a deal to avoid the tariffs. This would have been some way short of a free trade agreement but may have involved the UK dropping a Digital Services Tax disliked by major U.S. tech companies in return.

Behind the basic facts of the last week in U.S.-UK trade relations lies a far deeper drama. Since the end of World War II, almost all UK governments have emphasized both the importance of their relationship with the U.S. and a broad support for free trade. These two fundamentals were never supposed to come into conflict as is now the case.

Arguably, the UK public were never quite as convinced as their leaders. Huge public skepticism about 2003's invasion of Iraq was brushed off by then Prime Minister Tony Blair's desire to stay close to former U.S. President George W. Bush. Political leaders on both sides of the argument about leaving the EU emphasized trade in contradiction to evidence that fear of globalization and immigration made a significant difference to the vote to leave.

Once again now, a UK prime minister finds himself faced with public skepticism in trying to maintain a strong relationship with a U.S. president. Starmer remains publicly committed to seeking a trade deal with a U.S. that is clearly not supportive of open trade. Suggestions of retaliation are largely brushed aside, though to be fair UK business is also rather cautious about this. Instead, government briefings talk of the UK in its traditional self-appointed role as a "bridge between Europe and America."

There is an economic cost to this government's position. Economic analysis conducted prior to the Trump administration's tariffs suggest that deeper trade relations with the EU could be worth many times the value of those with the U.S. For a government that claims growth to be its number one priority, this is a striking demonstration of the importance given to the U.S.

While the UK government claims it can achieve the best of both worlds, there is a delicate balancing act between its activities in Washington and Brussels. Some trade demands of both are contradictory, such as on the alignment with food standards. More broadly, there is a growing suspicion in the EU that the UK will always put its U.S. relationship first. This may well limit what can be achieved in a "reset" of relations with the EU declared by the Labour government.

At the same time, the UK's desire to be a leading free-trade advocate with all countries is also weakened by its simultaneous wish to avoid offending Washington. The UK has not joined the interim replacement for the Appellate Body of the World Trade Organization – the Multiparty Interim Appeal Arbitration Arrangement – at least partially in deference to the U.S. At the recent Artificial Intelligence Action Summit in Paris, the UK and U.S. joined together in not signing the communique. All these challenges seem unlikely to deter the government from its path. Future ones would probably do the same.

For the UK, what this is likely to mean is that its independent trade policy agenda is never fully developed, given longstanding U.S. doubts about open trade. This will apply to relations with the EU, China and others, where there will always be one eye on approval from Washington. Even accession to the Trans-Pacific Partnership previously denounced by the U.S. president came in the slight hope that the U.S. would change its mind, and with the awareness that much of the text reflected the then U.S. model.

Fortunately, the UK's economic strengths particularly in services don't particularly depend on agreements. Investors continue to find the country to be a reasonable base.

EU-U.S. trade relations will, meanwhile, evolve without significant UK involvement, a relationship of two trade giants that will involve reciprocal actions and the possibility of future deals. What the UK may argue is that by staying close to the U.S., it will provide an opportunity beyond Trump to rebuild old partnerships.

Prioritizing the relationship with a difficult president and the U.S. may in this way be a laudable but costly endeavor, a choice that a mid-sized power makes when it can't have everything. That is not admitted, and such an approach is likely to be severely tested in the coming years, particularly if the U.S. retreats further. That would seem to be the long-term UK political reality judging by recent weeks.

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