A lesson from history

The Corn Laws used to be taught in English schools - I assume they still are - but evidently not in the United States if Donald Trump's tariffs announcement yesterday is anything to go by.

This was apparently due to be made on the first of the month but, obviously fearing it might be taken for an April Fool's hoax, was pushed back a day. After all, even Donald Trump wouldn't be so stupid as to let a bad joke spook the markets and wreck the US economy. Would he? So, heralding 2nd April as 'Liberation Day' (for some reason I had thought, in the US context, that was 4th July, but what would I know) Trump announced a raft of import duties for all the world's exporters to the US, ranging from 10-50%. 

These tariffs are billed as 'reciprocal' but, in Trumpian newspeak, that appears to have a different definition to the one offered by Webster's dictionary. In most cases, 'unilateral' would seem a more accurate description for what Trump envisages. For example, the UK has had a 10% tariff imposed upon it whereas the UK's import duty on US products ranges from 0-12%, with VAT payable on some imports at 20%, ie an average of around 4%.

Though the UK does not currently enjoy a bilateral trade agreement with the US, Trump dangles one before an ever-hopeful Sir Keir Starmer. Against this backdrop it seems unlikely the UK government will reciprocate by imposing additional tariffs on US goods. Unless, that is, trade negotiations fail, in which case all bets are off, as UK Trade Secretary, Jonathan Reynolds, has made clear, while urging cool heads. However, fears of a global 'trade war' are already causing jitters internationally and the outcome is hard to predict, especially when dealing with someone as unpredictable as Donald Trump.

Enforcing his narrative of US victimhood in the face of aggressive trade practices against it by other nations, Trump claimed “our country has been looted, pillaged, raped, plundered...Our taxpayers have been ripped off for more than 50 years, but it is not going to happen anymore". Coming from the leader of the world's largest economy and oldest democracy this was surprising, to say the least, but needs to be viewed through the distorting lens of Trump's winning pitch to his electorate: that the US has been taken for a ride by the rest of the world for decades. 

This hardly speaks of a confident, outward-looking superpower. Indeed, from a European perspective such claims seem positively risible but Trump's remarks are intended for domestic consumption, clearly playing on a deep-rooted sense of insecurity, vulnerability, even inferiority, amongst his embittered, inward-looking, MAGA-supporting base; a psychology that can probably be traced back to the American colonists' revolt against British rule in 1776.

So back to those British Corn Laws. Introduced in the United Kingdom in 1815, these were intended to stabilise the market for British-produced cereals - 'corn' being a generic term used in the UK to denote wheat, barley, oats, rye etc - by preventing cheap imports. Whether by accident or design, these laws had the effect of protecting wealthy landowners whilst disadvantaging industrialists and the poor. Effectively, having to spend a disproportionate amount of their income on bread meant the working-class had less disposable income to buy British-made goods, which severely impeded economic growth at the beginning of the Industrial Revolution.

Only in response to the Irish Famine of 1845 were the Corn Laws finally abolished, with much resistance, in 1846, after which free trade flourished as a political and economic philosophy, upon which Britain built a world-dominating mercantile Empire. So much so, in fact, that the grand new civic building erected in the burgeoning northern industrial city of Manchester shortly afterwards was named Free Trade Hall, a title it proudly retains to this day. Perhaps Starmer might gently remind Trump of these facts at their next meeting.

If not, the US may pay a high price for Trump's wilful ignorance.

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