Donald Trump has announced that he will impose tariffs on goods from the UK, Denmark and other European countries. The 10 per cent levies on exports to the US will apply to ‘all or any goods’ and come into force from the beginning of next month.
The move is in response to Europe’s opposition to his plan to take over Greenland. It’s worth looking at his explanation which was posted on his twitter clone Truth Social:
If no deal is reached by June the tariffs will be hiked again to 25 per cent and remain there until an agreement is reached for the US to purchase Greenland from Denmark. The billions this could cost European and British exporters, as well as American citizens, perhaps makes the small military deployments to Greenland some of the most expensive in history.
Back in Britain, Kemi Badenoch was first to condemn the President’s move calling the tariffs ‘a terrible idea’. A few hours later Keir Starmer issued a statement: ‘Applying tariffs on allies for pursuing the collective security of NATO allies is completely wrong. We will of course be pursuing this directly with the US administration.’ Meanwhile, there are already calls in Europe for a tit for tat response.
These new tariffs blow up both the UK-US trade deal signed last year and similar agreements made with the EU. It’s clear that slapping import taxes on goods is Trump’s preferred opening salvo in any negotiation so there will be temptation to respond in kind. That, it seems to me, would be counterproductive though given tariffs are always and everywhere a tax on consumers in the countries imposing them. There’d be no point making our own goods more expensive just to look strong in the face of Trump’s escalation.
What’s clear though is that any good will Starmer, and his Majesty, had built up in the White House has not lasted long. And with this week’s economic news providing an upside surprise on GDP growth as well as noises from the Bank of England’s monetary policy committee that inflation may come down quicker than expected, a tariff spat really is the last thing this government needs. Diplomats will no doubt now be searching for a solution to avoid the 1 Februaryimplementation deadline whilst also saving face. The pressure – especially in Europe – to respond in kind will be intense. But meeting tariffs with tariffs would be a mistake and just punish consumers at home.
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