Trump has promised to impose a blanket tariff of at least 10% on all imports, with tariffs as high as 60% on goods from China. I'm not sure that imposing asymmetrical tariffs is even possible under WTO rules but I don't suppose that bothers the presidential hopeful or his crazy MAGA followers.
Plenty of US companies import intermediate products (not finished goods) and their businesses may be destroyed if they can't get hold of vital components from overseas. The whole thing simply demonstrates how daft Trump is.
However, civil servants are taking it seriously in case the deranged orange baboon becomes the 47th POTUS in a few weeks and can't be persuaded to abandon the policy. The article quotes an anonymous Whitehall source:
“There are significant concerns in the security services about the economic impact of a full-blown trade war with China. We could end up as collateral damage. It could have a huge impact on supply chains to Western countries. The worry is that it will be a bigger hit to GDP than Brexit was.”
The importance to me is that there are now people in Whitehall who are prepared to admit openly that Brexit has provided a hit to GDP. Under the Tories this was virtually impossible. The pretence had to be maintained that Brexit was and still is a good idea. As Professor Chris Grey tweeted, Brexit has now become almost a standard unit for measuring economic damage. This is progress to my mind.
There is no doubt that a massive economic bloc like the EU is far better placed to weather a trade war than an isolated UK with huge import needs.
Another stark figure has emerged from research carried out by UK in a Changing Europe (UKICE). They have looked at public investment via the European Investment Bank (EIB) up to and after 2018, as Brexit began to take effect.
As usual, we have replaced the EIB with several different banks, the largest being the UK Infrastructure Bank (UKIB) – now renamed the National Wealth Fund.
While 2023 was a bumper year for this gaggle of UK investment banks, they still managed just 42% of the previous levels of EIB investment. More than that, if we compare it with what has happened in France since Brexit, and assume the UK would have continued as it did previously to receive about the same as France, public investment in this country could have, potentially, been 73% higher had the UK not left the EU.
In real terms, that amounts to a potential loss of over £44 billion in public infrastructure since 2017. That is an awful lot of investment that has been lost.
The UKICE report says former EIB president, Werner Hoyer, once predicted that it would take the UK a decade to replace the EIB. On current trends, this looks to be accurate. Even if investment in this country continues to grow by 20% each year (a rather big assumption), the UK will not overtake previous EIB levels until 2028.
It is another Brexit 'benefit' and one easily seen in the available data with perfectly reasonable assumptions being made about the counterfactual. Why Labour can't admit it is a mystery to me.
