Peter Burke
Chair
Oxford For Europe
8 April 2025
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Sadly, it is proving difficult to avoid talking yet again about the Orange One
We all knew from the start what enormous wrecking power Donald Trump had. Warnings were not lacking, particularly from those who had worked within his first administration. The harm he did in his first two months in office has exceeded most expectations. And yet it gets worse…
A bonfire of human rights
By pardoning the January 6 insurgents he has undermined the power of the courts to enforce the law. He has put an end to the post-war Western alliance and created massive uncertainty over European defence. He has betrayed Ukraine and acted as an enabler of Putin. He has dismantled US defences against Russian infiltration and cyberattacks. He has hobbled the leadership of the American military, and has turned the forces of law and order into personal storm troopers. He has profoundly damaged healthcare, science and education. He has driven a coach and horses through public services. He has turned equal rights for minorities into a term of derision. He has taken away the right of women to control their fertility. He has consigned thousands of people, without recourse to law or a right of appeal, to virtual (?) concentration camps. He has dismantled our defences against future pandemics and tried to criminalise those who protected us last time. He has abandoned foreign aid, which is already reckoned to have cost many thousands of lives. And, not least, he is doing all he can to boost the pace of climate change.
And yet the history books of the future may well tell us that all this pales into insignificance compared with the events of the past week.
Why such shock?
Perhaps the announcements of Wednesday 2nd April should not have come as quite such a shock. After all Trump’s attitude to tariffs was well known, and was known to be at total variance with common sense or the advice of almost all economists. And we know he has a record of listening to cranks. Yet what came was so much more likely lacking in common sense or sanity than even the worst expectations, that world markets were thrown into an almost unprecedented panic.
I am sure you have seen the Orange One wildly waving his table of tariffs, and declaring that they were “reciprocal” without showing any evidence of understanding the word. The one thing that the tariffs were not was reciprocal: a 20% tariff levied against the EU does not match the average figure of 2% which applies in the opposite direction. The figures on his table appeared to be almost random. Indeed had they been random it would probably have been a lot more sensible than the actual calculation. This, it turns out, was that the ‘correct tariff’ was the ratio between each country’s trade surplus with the USA and its level of imports from that country. There was a 50% discount, but there was a minimum figure of 10%, even for countries which had a trade deficit. The exceptions were North Korea and Russia, which were omitted completely. When asked the basis of this omission he said it was because the US does not trade much with those countries. It trades a great deal more with them than it does with the Falklands or with the Heard and McDonald Islands, which we now all know are inhabited only by penguins.
There are so many anomalies in Trump’s tariff regime that it feels almost like a waste of time to try to make sense of them. Many of the poorest countries have the highest tariffs, including Madagascar and Myanmar, which has just been hit by the most appalling earthquake (and is getting no help from the now-defunct USAID). The tariff for Reunion differs from that for the EU, despite the fact that it is part of France. Hasn’t anybody told Trump’s people? And so on…
USA “ripped off”?
What was in what Trump is pleased to call his mind? He claims that the tariffs were there to correct some kind of historic wrong, that the USA was being “ripped off” by the rest of the world, by countries which were behaving deplorably, among whom the wicked Canadians topped the list. That is only ever true if you believe that there is something morally wrong with having a trade surplus with the USA, and you can only believe that if you totally fail to understand international trade – as clearly many MAGA supporters do. The US tariffs were never reciprocal. Reciprocal is what the most recent Chinese tariffs are, and these have been roundly condemned by Trump as wrong and self-destructive. How does he not see that the same applies precisely to his own tariffs? And can he not recognise that when he himself reciprocates the Chinese actions he is causing damage to both sides? Reciprocal tariffs are the equivalent of a nuclear weapon. You hold them in reserve to use as a threat and your opponent knows that if he takes the first step the result is mutually assured destruction, M.A.D., which was of course the guiding principle of the Cold War.
The truth is that anybody expecting Trump to act with logic, consistency, probity or empathy is on a hiding to nothing. He doesn’t actually care about the figures. Damage to his own country or to the world economy is a matter of indifference to him. In the best tradition of Mafia bosses he places more store by harming his enemies and his rivals (he finds it hard to distinguish between the two) than he does on helping his friends. He knows what he’s doing is nonsense, and it is entirely possible that had he foreseen the seriousness of the consequences (maybe he did) he would still have gone ahead. His dream scenario is to keep people talking about him and to have the world beating a path to his door seeking favours. The first tariffs he raised were against Colombia, and he quickly learned that by doing this he got his own way. He believes he can now do the same on a global scale. Will he get away with that? Who knows?
There are very few economists, even unserious ones, who would not have tried to talk him out of his course of action. Even Elon Musk and other ‘tech bros’ as well as many Republican members of Congress, are starting to get very nervous. Did nobody in his inner circle talk sense to him? Unlike in his first term he has surrounded himself exclusively with worryingly loyal people, most of whom have few qualifications for the job. It is further plausable that those few who do have managed ahead of time to invest in a stock market collapse.
So will common sense ever prevail? Even if Trump pulled his tariffs tomorrow, it might well prove to be too late. It is impossible to get the toothpaste back in the tube. International financial order depends on confidence, confidence is hard won, and when it’s gone it’s gone. Not only in terms of defence but in economic terms, the world order which even the oldest of us have known all our lives, that world order is gone. What will take its place nobody knows.
Two misconceptions
Why is all this relevant to us in Oxford for Europe? Obviously because it will hit us in our pockets. But also because we have something to say.
Our opponents will try hard to spread 2 misconceptions. The first is that the UK has benefited from a lower tariff rate than many other countries because of Starmer’s obsequiousness towards Trump, and that on this basis we should pivot towards USA rather than Europe going forward. What the Tariff table shows is that Starmer’s approach made no difference. We have been treated like all other counties. The calculation is based solely on the fact that the UK does not have a trade surplus with the USA. No exemption is made for cars, where the 25% tariff applies as it does across the board, and this will seriously hurt our motor industry. And if you think it is about doing favours, look at his closest ally, Israel, which was given a 17% rate.
If we allow Trump’s tariffs to place a gulf between us and our true friends in Europe, we are just playing his game.
The second misconception is that at last Brexit is bearing fruit. Had we been in the EU we would have been subject to the same 20% tariff as the other members, with the bizarre exception of Reunion. Bear in mind, however, that our trade with the EU is almost five times as great as that with the USA. Our possible gain from Trump’s more “lenient” treatment is perhaps 0.5% of GDP, and this compares with the OBR estimate of a 4 to 5% hit resulting directly from Brexit. It is, in short, no compensation. There is strength in numbers, and never has there been more reason to show solidarity with our nearest neighbours than now, when we are facing unprecedented, unnecessary, irrational and malicious threat from an unpredictable bully.
The Tectonic plates have shifted, let’s be sure we do not have to cope alone.
Footnote: Trump has just proudly announced that the exchequer has gained $2bn a day from tariffs. It is as if he was unaware that the loss to US stocks over 4 working days has been almost $10 trillion, well over 1000 as much and equivalent to $30,000 dollars for every man, woman and child in the country.
The views expressed here are the author’s own and not necessarily representative of Oxford for Europe
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