Trump’s Trade wars: What Hopes for EU-UK Reset?

Stock markets tumble around the world. Uncertainty is economic forecasters’ watchword; no-one knows what may happen next as the US and China go head-to-head on tariffs. But, for sure, it’s not good for economies or growth around the world.

Today (9th April), the EU has taken some steps to respond to Trump’s steel and aluminium tariffs. But where may that leave US-EU relations – Trump and his entourage having previously poured scorn on the EU over both economics and security?

In all this turmoil, the UK government says it is sticking to its rigid fiscal rules while attempting to negotiate a partial trade deal with the US. Chancellor Rachel Reeves, in the last day, has said the new era means it is ‘imperative’ to improve trade relations with Europe. But, so far, that doesn’t mean changing any of the government’s red lines on EU relations, which it took over pretty much wholesale from the disastrous previous Tory governments.

Customs union or rejoin anyone?

Would the EU anyway be interested in a UK bid to negotiate a customs union with it – as the LibDems have suggested – let alone consider a rejoin bid, unlikely though that is given Keir Starmer’s stance? Political problems abound with these suggestions, not least time constraints. You don’t negotiate a customs union overnight. But Trump’s tariffs are happening now.

The new age of disorder that Trump and his minions are destructively introducing is not the most obvious moment to sidetrack into detailed talks on a customs union. And bear in mind that Turkey’s customs union with the EU means that it aligns with the EU’s tariffs and custom rules. This would be a hard sell for Starmer – to hand over trade powers to the European Commission in the midst of a rapidly unfolding international and domestic economic and political crisis. To negotiate a customs union where the UK somehow, though it’s entirely unclear how, had a say in EU trade policy would take even longer or most likely not be possible.

Politically, despite majorities in polls in the UK that view Brexit as a mistake, Starmer is facing a domestic audience that is, for now, increasingly right wing. Currently, the twin right/far right parties of the Tories and Reform are together polling close to 50%. This is driven by England and Wales. Reform is polling a lot higher now in Scotland but together Reform and the Tories account for around 30% of the vote in recent Scottish polls – a lot lower than in England.

It is hard to imagine anyone in Brussels looking at those UK polls and thinking it would be worth embarking on years of rejoin talks when there’s no guarantee that it wouldn’t be overturned again with a potential Brexit 2.0 under a Tory-Reform coalition government. And aided by the right wing, still eurosceptic media, the idea of talks on a customs union would be likely to increase those Reform and Tory numbers further – the UK handing the bulk of its trade policy to the EU in the midst of Trump’s chaotic new era doesn’t really add up.

Starmer’s government is anyway so focused on Reform and Tory voters in England, it’s beyond unlikely that Starmer would find the courage to speak honestly about the costs of Brexit and the charisma to talk inspiringly about the aim of rejoining the EU, or even a customs union.

EU-UK reset?

Where next, then, for EU-UK relations? Reeves wants closer and better trade relations but without dropping any red lines. Removing trade barriers with your biggest trade partner is a good idea. The EU takes 40% of UK goods exports and accounts for 50% of the UK’s goods imports.

But the EU-UK reset looks to be mostly proceeding, despite the global turmoil, on the same tracks as it has been on since Labour were elected. That means some sort of veterinary deal to ease trade in food and agricultural products, some sort of youth mobility deal that isn’t (from the UK’s point of view) akin to free movement, and some goals on mutual recognition of professional qualifications (that won’t be fast).

What has changed in the last year, because of Trump, is the major increase in EU-UK security and defence cooperation that is likely to be formalised in a pact at their 19^th May summit. And that summit should push forward elements of a reset which hopefully may include greater alignment on climate and energy on top of veterinary deals and so forth. Fish will also be on the agenda – the current EU-UK deal runs out next year.

Both the EU and UK have been back-tracking on, or weakening, climate commitments and policies in too many areas. But even so, alignment for instance on a carbon border tax would be a big step forward. May’s summit should show whether this is at all likely.

There’s also a risk that any putative US-UK trade deal could upset EU-UK relations. The UK government is aware of this. It’s not about to let American chlorine-washed chicken into the UK or its wished for veterinary deal with the EU will be off the table. But should there be a deal with the US that kowtows over the big tech companies, this might spoil the EU-UK political mood too – which has been so much warmer since Labour came to power.

And now?

There’s something rather last era about all this. Positive but relatively minor EU-UK reset goals seem a little beside the point, as Trump’s upending of the global order reverberates almost as fast as his destruction of US democracy and institutions. The US, EU and China are the big players in global trade – and so in the political dynamics of Trump’s age of disorder and disruption. The UK is a small player and not in a strong position.

Whether the UK will be jolted into more radical political and policy shifts in the coming weeks and months is one crucial and open question. And the UK government must be clear, however much it continues, rather hopelessly, to attempt to mollify Trump, that the EU is its priority political and economic partner in this unstable new era.