Donald Trump’s on the warpath, and the level of tariffs is gonna rise. Former Goldman Sachs official Gary Cohn has quit the White House in a further sign that the Trump administration’s free traders have decisively lost the internal battle.
In a way, that shouldn’t be a surprise: one of the few things Trump has held on to too consistently throughout his career is his scepticism about free trade.
The row has two immediate consequences as far as the United Kingdom is concerned. The first is the direct economic hit to the United Kingdom of it being harder to sell into the country’s biggest non-EU customer. The second is the potential that retaliatory action by China and the EU could trigger both a full-blown trade war and a global recession. Whether its a case of causation or correlation, the United Kingdom has, since the Brexit vote, become a global laggard as far as economic growth is concerned, so could be especially vulnerable to any reduction in global growth.
Any recession is bad news for the incumbent government, but it may make the Conservatives’ Remainer problem – that is, its difficulties with voters who backed David Cameron in 2015 but Remain in 2016 – more acute. If a trade war started by Donald Trump tipped the United Kingdom into recession, it couldn’t fairly be said to be a result of the government’s Brexit decisions: but I doubt that argument will receive anything other than short shrift from Tory Remainers.
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