Wednesday, 16 November 2016

The Brexit Trump

The Great British Brexit Debacle trundles on and on and on.  I'm sure we're all tired of this nonsense but we can't get a proper rest just yet because the barriers to Brexit glory have no end in sight.   What is the latest indignity to add to the litany of political misadventure?  It's the election victory of Donald Trump, of course.  I'm not going to dwell on the terrifying prospect of President Trump because this blog is really only about the EU and Brexit.  Having said that, "The Donald" might unravel the UK Government's plans for leaving the EU.  I suspect that Theresa May understands this but Nigel Farage most certainly doesn't.  What's going on?
Weirdly for a Republican, Donald Trump is actually an opponent of free trade.  That's perhaps not 100% accurate but it is fair to say that he can't point to a single US trade agreement he considers a good deal for America.  For many years now he has been consistently making the point that China joining the WTO led to the outsourcing of US jobs to Asia.  Likewise, he accuses NAFTA of having the exact same effect, but this time with Mexico as the beneficiary of US trade folly.  There is an argument to be had about the pros and cons of free trade but this is not one that the Brexiteers have been encouraging.  Liam Fox, for example, wants to leave the EU so that he can open the UK up to even more free trade.  In his ultra-libertarian fantasy the UK would use its post-EU freedoms to abolish all tariff barriers and lead the way as a beacon for "free and open trade".  This is the complete opposite of Trump and his proposed trade war with China and Mexico.
If Donald Trump wants to bring steel jobs back to the US he has a few options.  He could devalue the US dollar by borrowing huge amounts of money and spending it as fast as he can.  That might work. However, it is not only a risky strategy but also one over which he doesn't have full control.  Currency exchange markets, after all, are not controlled by politicians. The alternative is to raise tariffs on imported goods.  Raising tariffs is not a simple matter because the WTO is committed to lowering global tariffs.  Ah, but Trump only wants to raise tariffs on Chinese imports.  Could he do that?  No, he absolutely can't do that because WTO membership forbids discriminatory behaviour.  Leaving the WTO seems like the only solution.  He's pretty much said this quite a few times over the years.  Worryingly, The Donald isn't quite as inconsistent as he is painted.

Isn't it odd to see Farage out and out with "The Donald"? Farage campaigned to leave the EU so that the UK could sign trade deals till the cows come home.  Yet, here he is fannying around with someone who wants to rip up all existing trade deals and potentially leave the WTO. What's going on?  I'm guessing that Farage's real goal all along was to move the UK away from the European Social Model towards something much redder in tooth and claw. A special deal with the US is probably what he had in mind all along.  Alert readers will remember that TTIP stalled on the European side because many nations were worried about the threat such a deal would pose to workers' rights and environmental protections.  Without the EU and all its left-liberal concerns, the UK can now get on with the main act of becoming a virtual US state.  Great for Farage but not so great for Liam Fox.  Poor old Liam has so much personally invested in Brexit.  Specifically, he wanted to sail the globe on The Royal Yacht II shining the spotlight of free and open trade on everyone he met.  Ahoy there, matey, it all looks like a distant dream now.

This is all a bit of a mess.  On the one hand, we have Trump talking loudly about starting a trade war and complaining about trade deals being bad for US society.  On the other, we have a UK Government desperate to sign trade deals.  Any deal?  Yup, any deal will probably do because a US trade deal might be the only game in town if Donald gets his way.  This is not good news at all.

Over and out,


PS It goes without saying that I consider an independent Scotland in the EU to be the most stable path through what look like a turbulent few years ahead. 


  1. I've always suspected that a great deal of UKIP and the right's dislike of the EU was down to good old fashioned xenophobia and narrow blood and soil nationalism.

    The great island nation (and empire) of the United Kingdom of Great Britain and Northern Ireland was somehow superior to all these foreigners. You see examples of it time and time again with prime ministers and chancellors lecturing their European opposite numbers about how they should run their some cases countries that are VASTLY better run than the UK.

    The right here wants trade deals. They do not care about the workers' rights. They hold faith with the Thatcher doctrine that on the one hand we must have a low wage economy in order to be competitive, but, on the other hand, we must pay management outrageously high salaries to get "the best"...often from abroad!

    I'm not sure that Donald really understand most of what he says.
    For a start, he offshores his own brands:

    I wonder if he will lead by example?

    1. The free trade angle is looking look more and more of a sham. Even if it wasn't, it's clear that absolutely nobody in power understands the technical complexity involved with finalising trade deals. They are all obsessed with the tariff rate. Everyone reading this blog knows that non-tariff barriers are the real issue with trade because developed nations already have low tariff rates. It was only EU harmonisation that unlocked genuine free trade in Europe by completely removing technical trade barriers. We will never, ever get that again with any other nation.

      It looks more and more that we will have a hard Brexit. That means we lose all our freedoms of the European social model. Become more like the US, basically. This is not good.

      I didn't know about Trump offshoring his brands but I'm not shocked. Like all good dictators, do as he says but not as he does.


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