Can Keir Starmer trade his way around Trump’s tariffs?

The former president isn’t even back in the White House yet, but already he’s walking all over the Labour government’s plans for economic recovery, says Anand Menon

No one knows for sure how Donald Trump will behave once in office – but the warning signs are all there if you dare look. It’s particularly bad news for Keir Starmer.

The US president-elect has made clear that one of his first acts after being sworn in will be to sign an executive order imposing a 25 per cent tariff on goods imported from Mexico and Canada – a strong-arm tactic to encourage his nearest neighbours to do more to prevent drug-smuggling and illegal immigration into the US.

Trump has also threatened to place an additional 10 per cent on all Chinese goods, on top of any existing tariffs – until Beijing takes stronger action against fentanyl smuggling.

Those three countries in Trump’s crosshairs are by far the US’s largest suppliers of goods. What level of punishment might await lesser trading partners?

The European Union is already braced for Trump tariff threats – with good reason. His pick for vice-president, JD Vance, has made clear the incoming administration’s impatience with what it regards as EU free-riding on defence spending, and that the bloc “must stand on its own two feet”.

When it comes to the UK, Trump’s election win has already put into jeopardy Starmer’s deal to hand over the Chagos Islands – where the UK and US share a major air force base on Diego Garcia – to Mauritius.

Trump’s team is so opposed to what it considers to be a major security risk for the West that Jonathan Powell, the architect of the handover deal, has reportedly asked for an emergency meeting in Washington to persuade the US president-elect not to rip it up.

To minimise the impact of a trade war with the US, the UK could try and do a deal with the incoming president. Increased defence spending, particularly spending on American weaponry (ideally, kit we’d have bought anyway), might help eke concessions out of the White House. So, too, could an agreement on trade – at a minimum, one that gained the UK exemptions from the mooted tariffs; more ambitiously, the kind of free trade agreement of which Brexiters have long dreamt but which has been repeatedly kicked down the road by previous administrations.

Although buying American military hardware might mollify President Trump, it might also impede efforts to foster greater European self-reliance. Europeans will increasingly be called upon to do more for their own security as the US focuses on other priorities. This will involve the development of European capabilities rather than continued reliance on the US.

In the economic realm, US tariffs would clearly have an impact on UK growth prospects, albeit the majority of the UK’s trade with the US is in services and would hence be unaffected. However, tariffs would disproportionately affect high-productivity manufacturing in sectors such as automobiles, aerospace and pharmaceuticals – precisely those sectors that the Resolution Foundation argues are most impacted by Brexit.

Yet currying favour to avoid tariffs also carries risks. For one thing, Washington might demand movement on regulatory standards as the price for special treatment. Stephen Moore, a Trump economic adviser, has said Britain should align itself with the US rather than the “more socialist” Europeans, and that this would increase the willingness of the administration to do a free trade agreement with the UK.

And agreeing to relax restrictions on, say, the import of cheap American food would be unpopular at home. It would also scupper any chances of the veterinary deal with the EU that forms part of Starmer’s much-vaunted “reset”.

Even a deal short of watering down regulatory standards will affect attitudes over the Channel. The EU, still the UK’s largest trading partner, is planning retaliatory action if the US imposes tariffs. A UK exemption is hardly likely to inspire feelings of solidarity on its part. One danger is that member states, seeking greater economic security in the face of the Trump challenge, double down on a restrictive definition of “strategic autonomy”, making access more difficult for countries outside the single market.

And so difficult choices await. Between security and economics. Between security now and in the future. Between the United States and Europe. Peter Mandelson may well be in favour of the UK having its cake and eating it. This, however, may be easier said than done.

Anand Menon is the director of academic think tank UK in a Changing Europe and professor of European politics and foreign affairs at King’s College London