David Vance SubstackRead More
It was perfectly obvious to all who have eyes to see that President Trump’s reciprocal tariffs would hit the UK as well as the EU and that is exactly what has just happened,
Keir Starmer is resisting pressure to retaliate today after failing in his bid to persuade Donald Trump to spare Britain from brutal tariffs on steel. The US president has pushed ahead with the 25 per cent levy on steel and aluminium imports despite desperate pleas for an exemption. Sir Keir made a final attempt to head off the measures in a phone call with Mr Trump on Monday night. However, UK industries were then told to brace themselves for the impact of the tariffs, which came into effect at 4am.
By contrast, the ever aggressive EU responded by imposing further tariffs on the US.
The EU’s response to the Trump administration’s 25pc tariffs will affect €26bn (£21.9bn) of US goods from April 1. The bloc’s tariffs will hit not just US steel and aluminium products, but also textiles, home appliances and agricultural goods. European Commission chief Ursula von der Leyen said: “We deeply regret this measure”
For once, I will give Starmer a little credit because the right response is not go to war with Trump over this one. There is a time for nuance and this is it. The UK cannot possibly hope to win a trade war with the USA and recognising the need for greater diplomacy seems a good idea – as would dropping VAT, the primary cause of the Trump reciprocal tariffs,
The U.K. steel exports to the United States are worth over 400 million pounds ($518 million) a year, according to industry body UK Steel which has said the introduction of U.S. tariffs “would be a devastating blow to our industry”.
The EU steel exports to the United States around €3 billion a year, so this is going to impact them decisively. Germany and the Netherlands are the two main countries to feel the heat, hence the confected outrage by Ursula Von Der Leyen.
But at the heart of all of this is the crucial issue of international trade balances because that is where the pain is felt.
In the four quarters ending in Q3 2024, the UK had a trade surplus of £1.9 billion with the USA.
In 2024, the EU had a trade surplus of €198.2 billion with the United States,
This means that BOTH the UK and EU sell more stuff to the USA than it buys from it, although in the case of the UK it is marginal. So it’s the EU which now faces the greater pain. Trump has made it clear that he doesn’t like the EU and that this response was overdue.
If you want to look at it in absolutes, the EU economy is projected to grow by LESS THAN 1%. By contrast, the US economy is projected to grow by 2.4%. Picking a fight with the USA seem very imprudent but the hubris of the EU political leaders is off the scale.
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