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Friday, March 02, 2018

Donald Trump shows that the Brexiteers' promised land is a myth

I have lost count of the number of interviews with key Government Ministers or Brexit cheerleaders where they have spouted their usual nonsense about Europe needing us more than we need them, and how leaving the EU will give us the freedom to negotiate trade deals all around the world, even though we would have far more leverage in those negotiations as part of a bloc of 28 countries than if we go alone.

I am also sick of hearing how Donald Trump, who seems to hate the EU as much as Nigel Farage (though the US President hasn't received the hundreds of thousands of pounds paid to the former UKIP Leader over the last two decades), will offer the UK a preferential trade deal that will compensate us for what we are losing by positioning ourselves on the wrong side of the EU tariff barrier.

The reality, of course, is very different. About 43% of UK exports in goods and services went to other countries in the EU in 2016—£240 billion out of £550 billion total exports. America is the UK’s second largest export market. It accounted for 19% of the value of UK exports in 2016/17. It is also the second largest import market in 2016/17. 11% of the value of our imports came from the US, compared to 53% from the rest of the EU.

But the idea that the USA is going to do us any favours after we leave the EU is a fantasy and not supported by the facts. Like every other country, their number one concern is their own self-interest. That was starkly underlined by Donald Trump yesterday when he announced a huge hike in tariffs on imported steel.

As the Huffpost website points out these tariffs will have a “significant impact” on the UK:

Richard Warren, head of policy at UK Steel, said the US was a significant export market for British producers.

He said the US was a “fairly significant” market, accounting for around 15% of UK steel exports.

“At the minute we don’t know exactly how these tariffs will be implemented, so we’ll have to wait until the official announcement next week,” he said.

“But the assumption, from what he said, is that it would be a blanket tariff of 25% on all steel products.

“It’s very big, considering the thin margins that larger steel operators will be operating to – 25% is a significant tariff.”

“This really does throw a spanner in the works.”

The Press Association reports that the European Union has indicated it could retaliate, potentially starting a trade war with the US:

European Commission president Jean-Claude Juncker said: “We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk.

“I had the occasion to say that the EU would react adequately and that’s what we will do.

“The EU will react firmly and commensurately to defend our interests. The Commission will bring forward in the next few days a proposal for WTO-compatible counter-measures against the US to rebalance the situation.”

In these circumstances we are far better within the larger EU market than trying to respond on our own. If only the Brexiteers could see it that way.
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