Ross Clark

The reactions to Donald Trump’s tariffs between London and Brussels could not be more different. Where Keir Starmer was conciliatory, stressing that his government still hoped to negotiate with the US, European Commission President Ursula von der Leyen was quickly out of the blocks with threats of retaliation, saying that a package of measures was being finalised. It has since emerged that the EU plans to wait four weeks before imposing any retaliatory measures. Nevertheless it does rather expose the difference between the EU and post-Brexit Britain. The EU sees itself as a match for the US, and views Trump’s declaration of trade war as a power game. Britain, on the other hand, can afford to be more pragmatic, working out how it can play the situation best to its advantage.

So, Britain has got its trade deal with the US – of sorts. Donald Trump has awarded Britain no exemption from his tariffs. Even so, he has left Britain off lightly, by imposing tariffs of 10 per cent on imports from Britain to the US – the lowest he imposed on any country, along with Brazil. The EU, by contrast, has been imposed with a tariff of 20 per cent. Finally, then, we have a tangible benefit of Brexit that no one can ignore. Were we still members of the EU, our exporters would be hit much harder than they are being. Given that the US is our single biggest trade partner, that is not an outcome to be sniffed at.

Beware the words ‘liberty’ and ‘liberation.’ There are no end of evils committed in their names. Wednesday, according to Donald Trump, will be America’s Liberation Day, as citizens are freed from the yoke of free-ish trade. That is the day that importers who have been showering US consumers with cheap goods will be slapped with punitive tariffs. So far, the only thing that US consumers appear to have been liberated from is their money. Stock markets in the US and around the world have suffered a slide as markets digest the implications. They do not like what they foresee, which is the prospect of the golden years of globalisation going into reverse.

It has become customary for Budgets to unravel within 48 hours of being delivered. Rachel Reeves didn’t have much in the way of fiscal announcements to deliver on Wednesday, but even what she did have to say seems to be falling apart. It has since transpired that the Office for Budgetary Responsibility (OBR) did not take into account any risks from a transatlantic trade war when downgrading its growth forecast for 2025 from 2 per cent to 1 per cent. This is an additional risk which is almost certain to erode her newly-clear fiscal headroom and lead to more tax rises in the autumn Budget.

The government has less than a week to decide how to respond to Donald Trump’s announcement of 25 per cent tariffs on car imports to the US. Keir Starmer and Rachel Reeves still seem to think that Trump might exempt Britain, but there is little sign of that coming out of Washington. Unless Peter Mandelson turns out to possess rather more diplomatic skills than most people will credit him with, the Prime Minister will be faced with an uncomfortable choice: does Britain retaliate, thus risking an escalation of the transatlantic trade war, or does it suck it up and watch as Britain’s beleaguered car industry suffers even more than it is already under the government’s net zero policies?

Chancellor Rachel Reeves is seeking to trim £2 billion from the government’s £13 billion administration budget, with up to 50,000 jobs being cut in her Spring Statement. The Prime Minister Keir Starmer said the government was 'looking across the board' for savings. But do Reeves and Starmer really have the courage, and the political capital, to carry out such a purge? On paper, Labour's task looks straightforward enough. Civil service numbers over the past 15 years have performed a bungee jump. Between 2010 and 2016, the coalition, followed by David Cameron’s majority Conservative government, succeeded in trimming civil service numbers from 492,000 to 384,000. Then they began to climb again, firstly in response to the Brexit negotiations and then thanks to Covid.

There are, as Rachel Reeves keeps telling us, some tough choices to be made. Whether she is personally tough enough to make them is another matter. It seems as if the government is already retreating on proposed plans to freeze Personal Independence Payments (PIP) in the Spring statement in ten days’ time. A putative backbench rebellion has grown in size to a level at which even a government with a majority of 160 cannot be sure of success. There were also rumoured threats of ministerial resignations. It shouldn’t really come as a surprise. Many Labour MPs have it in their heads that they were elected to protect the poor and needy from heartless Tory cuts. They were hardly going to take kindly to a Labour Chancellor metaphorically kicking away the crutches of the disabled.