Trump is 'permanent risk' to UK trade, former ambassador warns

Donald Trump is a ‘permanent risk’ to UK trade according to the former British Ambassador to the US.

Speaking today at an evidence session of the cross-party UK Trade and Business Commission (UKTBC) of MPs and business leaders, Lord Kim Darroch, who was Britain’s man in Washington during Trump’s first term, warned that the US President’s repeated delays in introducing tariffs may have created an ‘optimism bias’ in people’s view of US trade policy but that it would still result in significant damage to both the UK and global economies.

While praising the Government’s work to secure a tariff deal with the US, Darroch asserted that Trump has been known to go back on recent agreements if he changes his mood, and that despite the government efforts, the US President is now considering tariffs on different UK industries and products not covered by the deal struck by Starmer in May, including pharmaceuticals, filmmaking and copper.

Experts providing evidence to the Commission echoed these sentiments and highlighted that the UK’s tariff deal with America could yet create issues for the UK trade with both the EU - if the UK were to strike mutual recognition agreements  (MRAs) with the US as set out in the tariff agreement, and China - if the Chinese government increases countermeasures against countries complying with US trade policies which seek to curtail Chinese exports. 

Repeating the potential for future US tariffs on other British industries not covered by the tariff deal, Professor Jun Du of Ashton Business school also questioned the long term wisdom in the UK government complying with coercive trade policies as it has weakened Britain's future negotiating position.

The session comes as the UK hosts French Leader Emmanuel Macron with an announcement expected on enhanced cooperation on defence and migration. Despite allusions in his address to parliament, very little has been said during the visit on the areas of increased EU-UK cooperation agreed in May.

Best for Britain polling shows more than twice as many UK voters want the government to prioritise trade with the EU over the US, while independent analysis from Frontier Economics shows that deeper alignment between the EU and the UK would completely offset the economic damage from US tariffs to the UK economy while shielding the EU as well.

Lord Kim Darroch said, 

“There is an optimism bias around Trump’s global tariffs because he keeps extending the deadlines and on the tariff deal struck by Keir Starmer, there may be some optimism and complacency that may not be justified. 

“Nothing is ever fixed in concrete with Donald Trump. We have the potential for future tariffs on pharmaceuticals, on films, on copper and so everything that we have negotiated and we think is settled can be reopened. There is a permanent risk.

Dr Deborah Elms, Head of Policy at the Hinrich Foundation said in reference to the US President’s trade policy,

“There is no strategy, really, there are some instincts. Any agreement that you think you have is temporary. It may last, it may not last, but don’t bother looking for a strategy.

“He loves tariffs, he likes chaos, he likes to be in the limelight, he thinks the world is ripping the US off, he’s happy to put unusual things together in a deal.”

Professor Jun Du, Professor of Economics, Aston Business School, said,

“That the UK has made the first step was possibly the best thing that the UK government could have done to protect its business and industry but in the longer term… collectively that bargaining power has been weakened and this weakens the whole world trade system. Thinking rationally, is this the best way to deal with bullies? Perhaps not.”

Andrew Lewin MP, Chair of the UK Trade and Business Commission said

“Nobody wins from a trade war and the UK has to continue to be a champion for free and open trade 

“The Government acted fast to protect British jobs by securing a lower rate of US tariffs for vital UK industries and this has made a material difference.

"We can further increase our economic resilience by seeking to make fast progress on the areas of cooperation set out in May between the UK and our largest market, the EU.”