The world looks on aghast as Donald Trump imposes blanket tariffs on all imports into the US. What Team MAGA describe as “Liberation Day” will have a devastating effect on global trade, not least on the British car industry. Economists are unusually united in near-unanimous condemnation of Trump’s new protectionist turn.
But behind the populist, America First bluster, there’s a kernel of continuity amid the era-defining rupture. Donald 2.0 didn’t begin this backlash against half a century of more integrated, transnational markets and globalisation, but he is accelerating it, and applying it in its most aggressive and chaotic form.
It was already clear during the 47th President’s previous term that electoral backlash against free trade had reached fever pitch. Faith in Western democracies and the underlying model of advanced economies had been undermined by the 2008 crisis. Rust Belt states that twice voted for Obama had decisively chosen a nationalist Republican for the White House in 2016, not least because of his promise to reshore manufacturing jobs.
Joe Biden, whose presidency now appears as a temporary blip or a last hurrah for American liberalism, gave this Trumpian turn a softer edge. But the core aims of the ailing Democrat’s last four years in office were congruent with the broad aims of blue-collar MAGA: boosting US industry; bringing manufacturing jobs back to the American heartlands; halting the US’s relative decline compared with the economic success of Beijing’s Made In China 2025 strategy; and decoupling the US economy from China’s in preparation for an extended period of Cold War-style multipolar confrontation.
The difference with Biden is that his strategy hinged around the green transition. Private capital would be enticed (or bribed) to invest huge amounts of money in green manufacturing jobs, renewable energy projects, as well as in chip manufacturing and infrastructure, through enormous government subsidies, business-friendly industrial policy, and “de-risking” pledges contained within the flagship Inflation Reduction Act. This was all about industrial renaissance and economic growth, catalysed by green-tinged, Keynesian climate stimulus.
Biden maintained Trump 1.0’s anti-China tariffs and supported the reshoring of supply chains. On the stage of foreign relations there was continuity too. Through Biden’s chaotic withdrawal from Afghanistan, and the establishment of the Aukus defence pact, the geopolitical pivot towards East Asia, itself set in motion by Obama, continued under the 2016 version of The Donald. Like Obama, Biden politely requested that his Nato allies commit more money to European self-defence rather than relying on American military largesse. Trump 2.0 has simply smashed the Atlanticist dream apart, sick-and-tired of attempts at reforming it.
Bidenism existed as a response to Trumpism: it was an offer, a bargain, targeted at the swing-state, working-class MAGA Democrats that had been captured by national populism. It promised to be the most pro-union Presidency in history, and “Sleepy Joe”, in the Trumpian parlance, was the first President to join a picket line. But the project was rejected by voters. And yesterday a right wing, billionaire New York real estate mogul announced a set of radical trade policies designed to boost domestic manufacturing in front of a crowd of Teamster union workers in high-vis jackets and hard hats, all sat cheering in the rose garden outside the Oval Office. If the twilight of the libertarian, Elon Musk version of MAGA is upon us, then this was J.D. Vance’s blue collar, Bannonite MAGA on full display.
The new MAGA administration, then, manifests as an anarchic, mercurial, iconoclastic and climate-skeptic continuation of the previous trend. But make no mistake, despite the apparent continuum at the core, this kneejerk leap represents a historic shift – a momentous, epochal turning point. The world’s largest market is now closed. The US has moved on from an attempt to harness the energy transition and progressively shift jobs and supply chains back to domestic shores. They are now attempting to totally re-order global trade flows, aggressively force multinationals to relocate production to the US, and eliminate the twin trade and budget deficits by turning suddenly inwards and imposing unprecedented and punitive tariffs on allies and foes alike, potentially sparking global recession and trade war in the process.
Parts of the left have been railing against globalisation, free trade, Nafta, the WTO and “globalist” international treaties for years. Industrial protectionism and a trade policy that supports domestic workers were key planks of the Bennite, Labour left programme for at least two decades. Trump has just destroyed the very “Washington consensus” that anti-globalisation movements protested in vain. That’s why Blue Labour’s Maurice Glasman intones that good socialists should be “dancing in the streets”.
But how will Labour respond? The growth model they promise is essentially based on a combination of planning and regulatory reform, plus a rapid, world-leading transition to net zero. All the indicators so far show the vision to be failing. The grid, infrastructure and generation upgrades being employed in the dash for green energy are dependent on Danish, Chinese and other countries’ imports rather than flourishing new factories in the North or the Midlands.
The UK’s carbon-intensive industrial production continues to decline, not least the steel and chemicals industry, burdened by some of the highest energy prices in the world. Labour’s modus operandi on geopolitical matters is based on a slavish devotion to international law and institutions, and repetition of the tired norms of legalism and proceduralism. All of this feels horribly anachronistic in the new world we are entering – one of hard power, the geopolitical primacy of strategic industrial production, and dog-eat-dog economic nationalism.
Starmer and Reeves may be relieved that the UK’s exports will only be subject to the lowest, “base level” levy of 10 per cent when they enter the US. But this is less a function of Number 10’s deft diplomacy than it is the UK’s woeful trade position vis-a-vis the US – our imports of US goods far exceed our puny exports, obviating the need for higher tariff barriers. The Prime Minister and his Chancellor’s economic outlook, already looking grim, just got far, far worse.
This article was originally published as an edition of the Green Transition, New Statesman Spotlight’s weekly newsletter on the economics of net zero. To see more editions and subscribe, click here.
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