The UK needs to remember that it doesn’t have the clout to challenge Trump to a trade war

The Europeans might be able to stand up to the Americans (though it would be unwise to do so), but the little ol’ British?

What should Britain, the European Union and the rest of the world do to react to Donald Trump’s trade war?

Nothing. Here’s why.

I’ll admit, most people’s reaction would instinctively be to stand up to this dreadful bully, to hit back. We could even have a little fun while we do so, making a point about the nastiness and futility of a trade war. There’s lots of talk about kicking the Yanks where it hurts – symbolically, wounding national pride and hurting Trump’s electoral heartlands, with one eye on the midterm elections in November.

So we could, as some in Europe have been suggesting, target Harley Davidson motorcycles, Florida orange juice, Jim Beam, Jack Daniels, the George Foreman grill, Marlboro, Levi’s, Nike and Ralph Lauren. Maybe Jean-Claude Juncker would like to slap a travel ban on Kim Kardashian, Lady Gaga and Madonna while he’s at it.

I think we all know Donald well enough to know what he would do next. In a bluster of anger and Twitterings, he’d slap more tariffs on famous European brands – Ferrari, French wine, Greek olives and Scotch whisky would all suffer. From Skye to Crete, European workers would suffer the consequences, with no skin off Trump or Juncker’s noses.

And then we’d have to retaliate again… and so the cycle of trade disintegration would continue. It is what happened in the 1930s, with grim consequences as trade wars begot real wars. It would be better right now to calm our nerves and go in for some jaw-jaw. The European Commission should follow an old British axiom and “count to 10” before it acts.

We’re better than that, and we should keep referring disputes to the World Trade Organisation (WTO), though without any false expectation that it’ll do much, because, as things stand, the Americans are basically boycotting the WTO court. In the unlikely event that it did try and tell the United States off, then Trump would just quit the WTO. For all its faults, that would not be good for the WTO, world trade or, well, anyone.

Second, we need to understand the nature of trade. It is true that Trump’s action will, in due course, mean workers in steel mills across Europe being laid off, or requiring their governments and taxpayers to subsidise them until this mad situation is resolved. But if we retaliate we will throw American workers out of a job, reduce the sales and profitability of American firms, and thus make them less able to spend their dollars on European goods and services – and reduce our own export earnings in the US.

It would mean that, say, a Harley Davidson worker who might fancy a bottle of fine French brandy would no longer be able to buy it. The Tropicana manager in Florida would cancel his planned holiday in Sicily. The designer at Ralph Lauren wouldn’t be able to afford that new Range Rover… and so on. Besides, why should we deprive ourselves of some fine American products just for the sake of spite?

Third, there is Brexit. One way of looking at the Trump trade war is as a warning that we will find negotiating a trade deal after Brexit with the Americans a painful affair. If we want to sell them our cars, and buy more of their cars, then we will also have to learn to love our old friend the chlorinated chicken, and enjoy the great taste of genetically modified corn.

The problem with the US, as with the EU, is that they are both about 10 times larger than the UK, and we need them more than they need us. It’s a simple matter of economic power and leverage. The Europeans might be able to stand up to the Americans (though as I say it would be unwise to do so), but the little ol’ British?

The best policy for the British, who will be in a challenging situation after Brexit, is to trade with the Americans on their terms because those are the only terms we are likely to get.

So we don’t want to be itching to escalate Trump’s trade war and retaliate against him while at the very same time we are preparing to conclude a trade treaty with him (that is, beg him for mercy). We are in bed with an elephant, and a bad tempered one at that, and we need to be realistic about that. If you think the guys in Brussels are bullies, please… meet Mr Trump.