Senior Labour MP Urges Government To Take Advantage of Trump's Tariff Chaos: “Don’t Let A Crisis Go To Waste”
4 min read
The government is being urged to use the turmoil created by Donald Trump’s tariff regime to create a new industrial policy and forge deeper trade links with the partners including the European Union.
Labour MP Liam Byrne, a former Treasury minister who now chairs the business and trade select committee, said Keir Starmer must not "let a crisis go to waste”, arguing America’s shift towards protectionism presents an opportunity for Britain to take a more significant role in global affairs.
Speaking to The Rundown podcast from PoliticsHome hours after Trump paused almost all of the higher tariffs he had imposed on the rest of the world a week prior, Byrne said the instability created by the White House was a “nightmare” for policymakers.
“This level of uncertainty makes it very difficult for business to plan, so that's really bad for investment decisions that we need to keep the global economy growing,” he said.
Trump announced on Wednesday that he was pausing higher tariffs on most countries for 90 days, admitting that people had become "yippy" in response to the original announcement.
Byrne said the risk now is “that this turns into just an all out trade war between the United States and China”, which would lead to a much smaller global economy, adding that is “why we do need call heads to prevail, and we need quite a bold reset of direction here in the UK”.
China was excluded from the Trump decision to pause higher tariffs. Instead, he put 125 per cent tariffs on Chinese imports and accused Beijing of a "lack of respect" after it retaliated with 84 per cent tariffs of its own.
There have been calls for Starmer to prioritise improving relations with the EU or even rejoining the bloc's customs union as a way of boosting economic growth and avoiding the US-China trade row.
The UK left the EU's customs union as part of Brexit, and Prime Minister Starmer has repeatedly said that the country will not re-join under his leadership.
However, Byrne said it was time for a “big, ambitious reset” with Brussels.
“We've got to really lead the free trading world in a new kind of free trade front, and the UK is in a really good position to do that,” he said.
"We have really close relationships with the EU, we’ve got the most ambitious free trade deal of anybody with the EU, but we're also one of the two biggest economies in CPTPP, which is the big trade alliance that covers most of Asia Pacific.
“So if you put the EU and CPTPP together, that's about a third of global GDP, that’s much bigger than the United States, so we should actually be using our relationship with both to really drive down trade barriers between the free traders of the world.”
Senior Labour MP Liam Byrne said shifting tariffs are a "nightmare" for business (Alamy)
Despite Trump's U-turn, US tariffs on UK imports remain at 10 per cent, while steel and the automotive industry face a 25 per cent rate.
Despite gloomy predictions about the impact on the British economy, with the Bank of England this week warning that global inflation could surge again, Byrne said he remains “pretty confident” that the UK can not only avoid recession, but can “get through this okay”.
“The lesson for the government is don't let a crisis go to waste,” he said.
“This is a moment when we can really dramatically step up the industrial policy that's been missing in our country for so long.
“What's holding our country back is an investment problem, it’s bedevilled us for a long, long time.
“Now, if we can get industrial policy at the right speed and scale, we can fix that problem for the first time in a generation.”
He also believes the UK remains in a good position to get a trade deal with the US which would remove any remaining financial barriers to trade, highlighting the work done by former ambassador to Washington, Karen Pierce.
Talks are ongoing between UK and US negotiators over a new economic deal that the Starmer government hopes will result in the removal of tariffs on goods heading across the Atlantic.
“We'd built a really strong set of strategic relationships with team Trump well ahead of the election, and so we're now in the VIP room in the White House when it comes to trade deals."
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