In choice between EU and US, there is one answer

Donald Trump’s worldview is zero-sum. He thinks that if he gains, someone else must lose. It is how he sees world trade: other countries, mainly China, are taking advantage of America. Therefore the solution is to impose tariffs on Chinese imports to the US, so that China loses and the US gains. But it is also how he sees Britain, and the rest of Europe. Hence the comment from Stephen Moore, the president-elect’s adviser, who seems to have reflected Trump’s thinking when he said: “Britain has to decide — do you want to go towards the European socialist model or do you want to go towards the US free market?”

As a statement of ideology, this is merely interfering in the political affairs of another democracy, and no worse than Labour staff going to help the Kamala Harris campaign in their spare time. But as a statement of trade policy, it is outrageous cheek, as well as being fundamentally mistaken. It is not news that Trump and his advisers think that European social democracy is “socialism” and that Britain should steer clear of it. But to say, as Moore did, that because Britain is “shifting more in a European model”, “we”, the incoming US administration, would be “less interested” in having a free trade deal with the UK is offensive, and bad economics.

We all know that it is Trump’s style to say unacceptable things, and if we have not become too polarised we may acknowledge that sometimes he has a point. China’s labour practices do not provide a level playing field, for example. Its government’s treatment of the Uyghurs and Tibetans raises ethical problems and its subsidies are often opaque. But it is plain unacceptable to suggest that Britain should be punished by tariffs for the sin of making political choices with which Trumpians disagree. That is what Moore seems to be suggesting: that Britain should choose between the EU and the US, with the implied threat that we would face higher tariffs on exports to the US if we make the “wrong” choice.

If that is what Moore and Trump mean, they must also know that Britain is only ever going to choose Europe in that scenario. The EU is our largest single economic partner, accounting for 43 per cent of our trade, while the US accounts for 18 per cent. Fortunately, Trump does not always mean what he says, and Keir Starmer must hope that Moore doesn’t either. Trump’s rhetoric about trade is fundamentally flawed. The whole point about trade is that it is not a zero-sum game. It happens because both sides benefit from it, and attempts by politicians to “protect” their voters from the effects of trade always end up being counterproductive.

That is why Trump did not launch an all-out trade war when he was president last time. Nor did he build a wall. Nor did he exclude all Muslims from America. Just as he will not, in the end, appoint Robert F Kennedy, the anti-vaxxer, as health secretary because the Senate won’t let him. RFK’s nomination is merely his fake reward for folding his presidential campaign and freeing his supporters to vote for Trump.

No doubt Starmer will find dealing with Trump awkward, which is one of the reasons Peter Mandelson would be a good choice as ambassador to Washington. Trump will want to humiliate Starmer even more than he did Theresa May. But Boris Johnson couldn’t do a trade deal with him, and they were supposed to be ideological and stylistic cousins. That deal is further away than ever — although it was never likely, given the obstacles in Congress — but what matters now is to head off the threat of blanket tariffs. That would be a disaster for Britain and for Starmer. No doubt the prime minister will try to straddle the choice between the US and the EU; he would be right to do so because trade is not a zero-sum game — we can have better trade relations with the US and the EU at the same time.

In the end, I think Trump will be swayed by conventional economic theory, which is that tariffs raise domestic prices. Given how important the recent inflation was in getting him elected, Trump ought to be wary of stoking that fire. Let us hope that, once again, he is all mouth and no trousers.