Keir Starmer. Photograph: Jonathan Brady/PA
The market reaction to Donald Trump’s announcement last Wednesday that he would be levying punitive tariffs on imports from the rest of the world was immediate: US stock markets experienced their worst single-day decline since Covid. The long-term implications will depend on how permanent Trump’s reshaping of the global economic order turns out to be. At the moment, his administration is sending contradictory signals as to whether these tariffs are here to stay, or whether they are intended to be used to in effect blackmail other countries into doing the bidding of the US. But the global recession they could trigger raises huge strategic headaches for a British government already struggling to square the fiscal circle and deliver its pledge to boost growth.
There is no logic to Trump’s trade populism: contrary to his claims, the US has done immensely well out of being the dominant economy in the global free trade system of recent decades. If Trump doesn’t change course quickly, his act of economic self-sabotage will reverberate around the world, harming not just Americans, but triggering increasing poverty in America’s poorer trading partners, generating even more of the global instability that has become synonymous with Trump’s presidency.
