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Business Mayor
25-05-2025
- Business
- Business Mayor
In the game of chicken between the US and China, round one goes to Beijing
There are a number of possible conclusions to draw from the recent tariff climbdown between the US and China but one stands out. The resolute position of Beijing, its willingness to 'fight to the end' and stomach a big hit to growth, if necessary, was undoubtedly underestimated by Washington. The escalating tariff war between the world's two superpowers had threatened to destroy $582 billion of US-China trade, a potential economic calamity for the Asian powerhouse but Beijing didn't blink. It even backed up its retaliatory position by fixing the exchange rate of the renminbi with the dollar, signalling to the US side it would depreciate its currency to offset Trump's tariffs. In the end, it was Trump's team that was seeking talks, contrary to his brag that countries were 'kissing my ass' to negotiate their way out of tariffs. It is not over by any means. Tensions are ratcheting up again and significant tariffs still apply but round one of this giant game of chicken goes to the Chinese. In a recent research note to investors, Deutsche Bank linked China's uniquely tough stance to the Opium Wars fought between Britain and China almost 200 years ago. That percipitated what China describes as its 'Century of Humiliation' when it was forced to cede control of large tracts of territory, including Hong Kong, to coercive Western powers and which culminated in a brutal Japanese invasion in 1937. Similar to today's confrontation, the Opium Wars (the first one involving Britain and China was fought between 1839 and 1842) were driven by trade imbalances. 'While Chinese goods like silk, tea and porcelain were in high demand in Britain, China bought few British goods in return,' Deutsche Bank noted. 'As the drain of silver became too much, Britain sought to make China accept opium in exchange, and ultimately overcame China's resistance to this trade by fighting the Opium Wars.' Britain had been smuggling opium (made from the sap of poppy plants) from their Indian colonies into China against the wishes of Chinese rulers, who were alarmed by the widespread use of the drug and its negative impacts on the country's economy and social fabric. By the end of the 19th century, it is estimated that nearly 10 per cent of China's population was addicted to opium. Instead of targeting users, China targeted the pushers (Britain), first writing an open letter to Queen Victoria, then taking matters into their own hands by seizing shipments. That latter act escalated tensions and ultimately led to a military confrontation which Britain, largely because of its technological and military might, won. British steam-powered gun boats played an important role. The wars resulted, from China's perspective, in a series of humiliating treaties, each expanding the size of Britain's Hong Kong territory. These treaties were then followed by a 99-year lease in 1898 that allowed Britain to control even more land – a lease that ran out in 1997, the year Hong Kong was ceded back to Beijing. 'This memory likely informs China's approach to external pressure today and its willingness to stand up to economic coercion,' Deutsche Bank said. But is also makes clear that China's situation in terms of economic and military power could not be more different today. 'China now has the world's largest navy, with 200 times the shipbuilding capacity of the US, and is at the forefront of industrial innovation across sectors from telecom hardware to EVs,' it said. 'The fact that China retaliated strongly to US tariffs and made no publicly known concessions to effect the reduction, highlights that we are in very different times,' it said. It is easy to see the stand-off and the seeming climbdown by the US in the context of China thinking in centuries versus the US's short-termism. Or the chess-related cliché, attributed to former US secretary of state Henry Kissinger, that China thinks in terms of strategic encirclement while the US tries to checkmate opponents. There's also a stereotypical view that dictatorships are better at long-term planning because they don't have to worry about the next election. But autocratic leaders can be swept away on a sudden tide as the collapse of the Soviet Union showed. More recently, Yevgeny Prigozhin's unimpeded march on Moscow in 2023 cast Russian president Vladimir Putin's seemingly ironclad hold on power in a very different light. The Wagner militia leader was subsequently killed in a plane explosion which most see as a Kremlin-inspired revenge attack. Great-power dynamics are complex. Trump's cosying up to Putin and his absurd attempt to blame Kyiv for Russia's invasion can be viewed as an attempt to pull Russia away from China. Russia and China are uneasy bedfellows not least because the USSR tried to exert control over Beijing and China's border regions during the Cold War, a friction that former US president Richard Nixon cleverly exploited to decouple China from the USSR in the 1970s. Current US policy is now being referred to as a 'reverse Nixon', decoupling Russia from China. But as Deutsche Bank makes clear, China is now big enough to stand on its own against the US.
Irish Times
25-05-2025
- Business
- Irish Times
In the game of chicken between the US and China, round one goes to Beijing
There are a number of possible conclusions to draw from the recent tariff climbdown between the US and China but one stands out. The resolute position of Beijing, its willingness to 'fight to the end' and stomach a big hit to growth, if necessary, was undoubtedly underestimated by Washington. The escalating tariff war between the world's two superpowers had threatened to destroy $582 billion of US-China trade, a potential economic calamity for the Asian powerhouse but Beijing didn't blink. It even backed up its retaliatory position by fixing the exchange rate of the renminbi with the dollar, signalling to the US side it would depreciate its currency to offset Trump 's tariffs. In the end, it was Trump's team that was seeking talks, contrary to his brag that countries were 'kissing my ass' to negotiate their way out of tariffs. READ MORE It is not over by any means. Tensions are ratcheting up again and significant tariffs still apply but round one of this giant game of chicken goes to the Chinese. In a recent research note to investors, Deutsche Bank linked China's uniquely tough stance to the Opium Wars fought between Britain and China almost 200 years ago. That percipitated what China describes as its 'Century of Humiliation' when it was forced to cede control of large tracts of territory, including Hong Kong, to coercive Western powers and which culminated in a brutal Japanese invasion in 1937. Similar to today's confrontation, the Opium Wars (the first one involving Britain and China was fought between 1839 and 1842) were driven by trade imbalances. 'While Chinese goods like silk, tea and porcelain were in high demand in Britain, China bought few British goods in return,' Deutsche Bank noted. 'As the drain of silver became too much, Britain sought to make China accept opium in exchange, and ultimately overcame China's resistance to this trade by fighting the Opium Wars.' Britain had been smuggling opium (made from the sap of poppy plants) from their Indian colonies into China against the wishes of Chinese rulers, who were alarmed by the widespread use of the drug and its negative impacts on the country's economy and social fabric. By the end of the 19th century, it is estimated that nearly 10 per cent of China's population was addicted to opium. Instead of targeting users, China targeted the pushers (Britain), first writing an open letter to Queen Victoria, then taking matters into their own hands by seizing shipments. That latter act escalated tensions and ultimately led to a military confrontation which Britain, largely because of its technological and military might, won. British steam-powered gun boats played an important role. The wars resulted, from China's perspective, in a series of humiliating treaties, each expanding the size of Britain's Hong Kong territory. These treaties were then followed by a 99-year lease in 1898 that allowed Britain to control even more land – a lease that ran out in 1997, the year Hong Kong was ceded back to Beijing. 'This memory likely informs China's approach to external pressure today and its willingness to stand up to economic coercion,' Deutsche Bank said. But is also makes clear that China's situation in terms of economic and military power could not be more different today. 'China now has the world's largest navy, with 200 times the shipbuilding capacity of the US, and is at the forefront of industrial innovation across sectors from telecom hardware to EVs,' it said. 'The fact that China retaliated strongly to US tariffs and made no publicly known concessions to effect the reduction, highlights that we are in very different times,' it said. It is easy to see the stand-off and the seeming climbdown by the US in the context of China thinking in centuries versus the US's short-termism. Or the chess-related cliché, attributed to former US secretary of state Henry Kissinger, that China thinks in terms of strategic encirclement while the US tries to checkmate opponents. There's also a stereotypical view that dictatorships are better at long-term planning because they don't have to worry about the next election. But autocratic leaders can be swept away on a sudden tide as the collapse of the Soviet Union showed. More recently, Yevgeny Prigozhin's unimpeded march on Moscow in 2023 cast Russian president Vladimir Putin's seemingly ironclad hold on power in a very different light. The Wagner militia leader was subsequently killed in a plane explosion which most see as a Kremlin-inspired revenge attack. Great-power dynamics are complex. Trump's cosying up to Putin and his absurd attempt to blame Kyiv for Russia's invasion can be viewed as an attempt to pull Russia away from China. Russia and China are uneasy bedfellows not least because the USSR tried to exert control over Beijing and China's border regions during the Cold War, a friction that former US president Richard Nixon cleverly exploited to decouple China from the USSR in the 1970s. Current US policy is now being referred to as a 'reverse Nixon', decoupling Russia from China. But as Deutsche Bank makes clear, China is now big enough to stand on its own against the US.
Observer
20-05-2025
- Politics
- Observer
From humiliation to a Century of Justice
Between 1842 and 1945, eight foreign powers conspired to strip China of its sovereignty, wealth and dignity in what the Chinese people call as the 'Century of Humiliation". Great Britain's Opium Wars forced millions into addiction and ceded Hong Kong; France imposed unequal treaties and seized territories in Guangxi and Guangdong; Japan's incursions into Taiwan, Manchuria, and coastal provinces inflicted decades of occupation; Russia pressed deep into Manchuria and the Amur region; Germany established a naval base at Qingdao after leasing Jiaozhou Bay; Austria-Hungary coerced minor concessions following the Siege of Beijing in 1900; Italy extracted extraterritorial rights and treaty ports; and the United States enforced the Open Door policy to guarantee its merchants unfettered access and immunity from local law. These powers treated China as a quarry for opium, territory and raw materials, bringing an end to the Qing dynasty's power and prestige for good, plunging Chinese families into poverty, igniting uprisings and freezing China's development. Today, that same arrogance and appetite for control resurfaces across the globe, especially against the so called Global South. In just the past weeks, the 47th President of the United States visited Saudi Arabia, Qatar and the United Arab Emirates to sign almost RO 1.5 trillion in technology, energy and defence agreements. Yet while headlines glorified the size of these deals, parents in the Occupied Palestinian Territories are picking body parts of the dead children from the rubble, the hospitals of Gaza lie in ruins, humanitarian supplies are blocked, and Palestinians endure what countless observers describe as a campaign of collective punishment, starvation, bombardment and forced displacement. The contrast is stark: transactional diplomacy on one hand, and systemic violence on the other. These are not isolated tragedies but echoes of histories we refuse to learn from. To break this cycle of impunity, we must adopt a 'Century of Justice' Roadmap: A concise, hard-edged framework to replace the old world's greed-driven systems with one that centres actual human dignity and sustainable cooperation. The first element is the Shared Ethical Code, a binding compact that defines non-negotiable standards for state and non-state actors alike. Under this code, no government may employ killer Artificial Intelligence - AI technology, collective punishment, use starvation as a weapon, or seize territory by force. An independent council of jurists and civil-society representatives would monitor compliance in real time. Violators would incur targeted sanctions, asset freezes and travel bans. This is not idealism; it is deterrence through accountability. Second, we prepare Leaders of Conviction. From my own experience, elections become popularity contests driven by fear and factionalism instead of just common, interests. Under this pledge, every candidate, local, regional, or national commits to transparency in decision-making, to resolving disputes through dialogue rather than proxy wars, and to refusing to outsource violence to militias or private armies. Should any signatory authorise bombing of civilian infrastructure or the demolition of homes, that leader's regime automatically triggers diplomatic isolation and suspension from multilateral forums. Citizens and parliaments, empowered by this pledge, can hold their leaders to account even in emergencies. Third, the roadmap establishes Justice Alliances - practical coalitions pairing governments with civil-society groups, faith communities and the private sector to confront war's aftermath. In Palestine, for instance, these alliances would comply with the UN resolutions and International Court of Justice - ICJ decisions to coordinate humanitarian corridors in Gaza and other Occupied Territories, document and prosecute war crimes and design long-term reconstruction plans. Funding would come from reparations levied on aggressor states and corporations that profit from conflict, creating a direct link between wrongdoing and responsibility for rebuilding. By working in coordinated task forces rather than scattered NGOs, resources are pooled, expertise shared and survivors supported with dignity. Fourth, we must ratify Sustainability Pacts that bind producers and consumers in equitable resource stewardship. These legally enforceable agreements cover water, minerals, forests and carbon emissions, tying access and extraction rights to third-party audits and community-driven management. When a nation or corporation overreaches - clear-cutting forests, diverting rivers, or looting minerals, their concessions are voided and they incur reparations owed to affected populations. Such pacts transform mercenary resource grabs into partnerships that safeguard ecosystems and livelihoods. This Century of Justice Roadmap is no utopian manifesto. As the Chinese people ended the Century of Humiliation to become a global superpower, so can the Global South, including the Arab and Muslim world. This is a call to action rooted in the hard lessons of history. Insist that your institution endorse the Shared Ethical Code. Demand that every public office candidate signs the Leaders of Conviction pledge. Join or support a Justice Alliance focused on the world's worst humanitarian crises. Pressure corporations and states to ratify Sustainability Pacts. We stand at crossroads: We can repeat the old script of power, profit and impunity, or we can forge a new century defined by justice, not greed. The choice is ours, and the time to act is now even if this takes a hundred years.
Asia Times
02-05-2025
- Politics
- Asia Times
America is in Asia, but not of Asia
Everybody was kung fu fighting Those cats were fast as lightning In fact, it was a little bit frightening But they fought with expert timing – Carl Douglas The United States of America ruined its future as an Asian power 143 years ago when it passed the Chinese Exclusion Act of 1882, the first US law to prevent immigration of a specific nationality. In the 19th century, China was turned upside down by internal chaos. The Opium Wars, the Taiping Rebellion, clan feuds, droughts and famines pushed waves of Chinese migrants out to all corners of the world – particularly Southeast Asia, Europe and America. Starting with the California Gold Rush of 1848-1855, waves of Chinese migrants fanned out across the western United States working in mines, laundries, restaurants and on construction projects. Chinese coolies were instrumental in the arduous construction of the Central Pacific route of the first transcontinental railroad, cutting through the Sierra Nevada Mountains to connect Nevada and California. In his 1920 book 'The Rising Tide of Color: The Threat Against White World-Supremacy', eugenicist and racial anthropologist Lothrop Stoddard of 'The Great Gatsby' infamy wrote of Chinese labor: At home, the average Chinese lives his whole life literally within a hand's breadth of starvation. Accordingly, when removed to the easier environments of other lands, the Chinaman brings with him the working capacity which simply appalls his competitors. F Scott Fitzgerald dismissed Stoddard by making him an obsession of the boorish Tom Buchanan (misnaming him 'Goddard' to boot). On the issue of Chinese labor, however, Stoddard merely reflected the American opinion that prevailed in the 19th century and that ultimately resulted in the Chinese Exclusion Act. By the 1870s, Chinese men accounted for a quarter of California's workforce. White workers were hard pressed to match the industriousness of the Chinese, reflected in the fact that the Central Pacific Railroad paid Chinese workers a premium salary: $31 per week versus $30 per week for whites. Resentments intensified after the Panic of 1873, resulting in increasing restrictions on Chinese immigration until the broad ban of the Chinese Exclusion Act was enacted in 1882. A harrowing 'driving out period' followed the immigration ban, with Chinese evicted from communities where they had long settled. The Rock Springs massacre of 1885 and the Hells Canyon Massacre of 1887 were especially gruesome episodes of anti-Chinese violence. The Chinese Exclusion Act was repealed in 1943, but by then, the damage had been done. Today, there are 5.5 million Americans who claim full or partial Chinese ancestry, a mere 1.6% of the population. This compares with 38.6 million (11.3% of the population) claiming Irish ancestry, 49 million (14.4%) claiming German ancestry and 16.8 million (4.9%) claiming Italian ancestry. There are 3.6 million more Scandinavian Americans than there are Chinese Americans. Nativists were dead set against nonwhite immigration. Cartoon image via National Public Radio. There are 26 million Americans who claim full or partial Asian ancestry, 7.2% of the total population. If the Chinese Exclusion Act of 1882 had never been passed, there would certainly be far more. At the time, China had a population of 400 million, Europe 330 million and the United States 54 million. In a counterfactual sans Exclusion Act history, it is not hard to imagine over 100 million Asian Americans today. Alcatraz Island could have been the West Coast's Ellis Island, processing Asian immigrants well into the 20th century. Of course, this alternate universe America would be very different and we could have much fun speculating on the endless counterfactual possibilities. Suffice it to say that a United States with over 100 million Asian Americans would forever cement the republic as not just a Pacific but an Asian power. That, for better or for worse, is not the America we have today. The United States today may be a Pacific power, but it is certainly not Asian. America became a Pacific power after it, fearing being shut out of the opium trade by European powers, sent Commodore Perry and his black ships to force open Japan in 1852. Ever since, the United States has been a military presence in Asia through subsequent kerfuffles like the Second Opium War, the Boxer Rebellion, World War II, the Korean War and the Vietnam War. As time goes on, it is becoming ever more apparent that the United States is in Asia, but it is not of Asia. Korea is divided. So is China. Vietnam, after much carnage, was abandoned. And Japan has been kneecapped into economic stagnation and bonsaied into cultural anomie. And now, the United States has just picked an economic war with China, which it is highly likely to lose and lose spectacularly (see here). The danger of America being in Asia but not of Asia is that it is playing on alien terrain, subject to information asymmetries, and prone to bad judgment. There are so few Chinese Americans that they essentially have no political power. Because of that, the expertise of the Chinese Americans who do exist is distrusted and dismissed as Washington takes its cues from grifters (see here) and China 'experts' who 'fell in love with Mandarin' at Princeton or the like. In the counterfactual America of 100 million Asians, Chinese Americans would surely have amassed significant political power and Washington would be able to access real experts without political suspicion. America would trust Treasury Secretary Zhang to go up against China as much as it trusted Supreme Commander Eisenhower to take on Germany. But alas, that is the counterfactual America. The factual America chose to fight China with the ignoramuses it trusts, not the experts it needs. This is what happens when America is in Asia but not of Asia. America started a fight as though it didn't know China is more than twice its size (see here). To be in Asia but not of Asia when China is the size it is and still growing means to not be in Asia for long. The US military presence in Asia is an alien distortion, imposing social, economic and civilizational costs on both sides of the Pacific. The US is not particularly reliant on Asia economically (36% of imports and 24% of exports) and is minimally integrated culturally. English is the lingua franca in Europe and far more Americans speak Spanish than all Asian languages combined. While English is commonly spoken in Asia, it is hardly universal – not even among the highly educated. Asia, as far as most Americans are concerned, is an exotic other and vice versa. The costs of maintaining a forward US military presence in Asia are immense. Total spending on defense is likely over US$1 trillion (including intelligence agencies and DOE nuclear weapons, etc.), or approximately 3.4% of gross domestic product (GDP). The tyranny of distance, on top of a massive industrial base, allows China to impose highly asymmetric costs on the US. Total spending on defense by China is likely around $300 billion, or about 1.6% of GDP. Because GDP can be squirrely given how services are accounted for in China, a more revealing comparison may be with industrial output. China's defense spending is around 4% of its industrial output versus about 25% for the US. One of the reasons the Soviet Union collapsed was that the US, given its technological superiority and the then USSR's vast vulnerable landmass, was able to impose asymmetric costs on the Soviet defense budget – the Ronald Reagan strategy. Analysts have estimated that the Soviet Union was spending 12-20% of its GDP on defense in the 1980s trying to keep up with Reagan's Pentagon budget increases and whiz-bang Star Wars demonstrations. This time around, China is implementing the Reagan strategy with annual PLA budget increases and whiz-bang demonstrations of 6th-generation fighter planes (see here). Can Joe Six Pack American be blamed for asking what it is all for when he is living paycheck to paycheck? America is not, after all, an Asian nation – it fatefully, for better or for worse, decided not to be 143 years ago with the Chinese Exclusion Act and confirmed that decision in WWII with Japanese American internment camps. America is not full of Zhou Six Packs with deep historical ties to Asia. Proponents of the pivot to Asia and/or China containment policy offer up a confused litany of reasons for America's military presence. The most visible spokesman for this position is Elbridge Colby, currently undersecretary of defense for policy at the Pentagon, who wrote the book 'Strategy of Denial.' The fear is that a hegemonic China in Asia would economically gate-keep the region from American commercial interests. Given President Donald Trump's attempt to extort the world with his 'Liberation Day' tariffs, we must concede that a hegemon may indeed behave poorly for no good reason at all. The issue we have with Colby is once again the issue of America being in Asia but not of Asia. How good of a handle does Colby have on the costs that his strategy of denial requires? America currently suffers from a whole panoply of domestic ailments, from inadequate healthcare to lousy education to decrepit infrastructure to homelessness. Does Colby fully understand what he wants to commit America to? Does Colby understand that China's GDP is two to three times that of the US – something Treasury Secretary Scott Bessent and team surely (dis)missed? Does Colby understand that there are 45 times as many highly capable (top 1.5%, US basis) math students in Chinese high schools as American high schools? Does Colby understand that approximately 20-30% of Chinese high school students can score in the 99th percentile on the math section of the SAT? 99th percentile US math level is table stakes in China, nothing special, a mere B+ student in the Gaokao system. Does Colby understand that China generates twice as much electricity, produces 13 times as much steel, 22 times as much cement, three times as many cars and has over 250 times the shipbuilding capacity as the US? Colby's family history perfectly illustrates being in Asia but not of Asia. He is a scion of the CIA/Carlyle Group/Yale University with a deep family history in Asia. The first Elbridge Colby (great-grandfather) was an officer in the US Army stationed in Tianjin. Grandfather William Colby was director of the CIA and did god knows what in Asia during the Vietnam War. Father Jonathan Colby is an executive at Carlyle who spent much of his career in Japan. The scion himself is a product of international schools in Asia (but does not speak an Asian language). At one point, young Colby tweeted that he was 'not an expert on Taiwanese society and politics', an odd admission from someone whose life's work is the prevention of China's reunification with Taiwan. This is all quite illustrative of America's confused presence in Asia. In an interview, Colby used scare tactics, saying that an Asia dominated by China would impoverish America and China would then have the world's largest corporations and highest-ranked universities. Last year, the US retook Fortune's Global 500 crown away from China with 139 companies on the list versus China's 128. The two nations have been exchanging the top spot for the past few years. This is a far cry from 2010, when the US had 139 companies on the list versus 46 from China. Similarly, China's universities are rocketing up the league tables, capturing 16 of the top 20 positions on the Nature Index. Image: Nature While an Asia dominated by China, which then decided to gate-keep economic access, could indeed damage America, climbing the economic ladder is likely far more dependent on first-order principles like investing in education, infrastructure, public health, executing well-thought-out industrial policies, and stamping out graft and corruption. America is falling behind not because China is modernizing its military, but precisely because America wasted trillions of dollars on unnecessary wars in Iraq and Afghanistan, and now threatens to militarily challenge the biggest player that ever was. Colby calls himself a realist, though it's not clear that he knows exactly what he is. Just like America does not know what it is. America may want to be an Asian power, but that ship sailed in 1882. America is not Asian – it chose not to be on more than one occasion – and has demonstrated a limited capacity to understand any region outside its borders, even Canada. To devise realist policies for Asian security requires expertise on the region's society and politics. Otherwise, one is not weighing costs and benefits but merely pointing in ideological directions. But nowadays that passes for 'realist' thinking among America's Asia 'experts.' When all is said and done, America is in Asia because it finds itself in Asia. There is no reason: Like international school students who don't learn the local language, they are there because that's where they are. Not everything has a reason or lasts.
The Independent
08-04-2025
- Business
- The Independent
There's barely a human being on the planet who will be unaffected by Trump's tariffs misadventure
Even in these days of hyper-polarised politics, it should not be too controversial to say that a full-on trade war between the world's two largest economies has the potential to create a global slump. Whether he anticipated such a firm response from the Chinese leadership or not, President Trump's successive tariff increases have brought forth a fearsome response from Beijing – ramping up tariffs to the same extent that the Americans have. Impetuous as ever, Donald Trump decided to issue China with an almost immediate deadline to withdraw their retaliation, or face another 50 per cent ad valorem import tax on Chinese goods entering the United States – bringing the total general tariff rate to 104 per cent. The Chinese response to this ultimatum was to 'fight to the end'. China is not Ukraine, President Xi is not Volodymyr Zelensky – and President Trump should not have tried to bully another industrial and military superpower in this manner. As a nation, China remains deeply resentful of the 'century of humiliation' it endured before Mao reunited the nation in 1949. Perhaps without realising, or caring about their sensibilities, Mr Trump's demands carried painful echoes of forced Western economic treaties, colonialism, the Opium Wars, Japanese invasion and the dismemberment of the country. President Xi could not be expected to meekly back away on Washington's orders. Where this geopolitical game of chicken will end, no one can know – but the tariffs are escalating to absurd levels, ones that would effectively end trade between America and China, and so profoundly damage both that, at some point, a more constructive approach will emerge. Already, the vibes emanating from the White House suggest that the president is open to 'deals' with some countries that would lead to lower tariffs overall. A call with Prime Minister Ishiba of Japan will lead to 'negotiations', which is at least something to cling to. Hence the relative calm that has returned to financial markets. Yet that may not last as the markets edge towards bear territory, and the risks remain. The UK prime minister has told MPs that this is not some passing episode, and the 'world order' has changed. Sir Keir is right in saying that. In defence, in security, and now in trade and economics, the old assumptions about the Western alliance have been shaken, if not broken. The reverberations of the Trump revolution are far from over. Indeed, there can hardly be a human being on the planet that will not be impacted by the turmoil. In Britain, the government has rightly rejected engaging in a trade war with America, for the excellent reasons that it would do the struggling economy no good and be futile. Nonetheless, trade and exports will be hit, supply chains disrupted, and the savings of many will be devalued. The experts agree that a combination of the 10 per cent tariffs being imposed on the UK and the wider global trade recession will halve the UK's already feeble growth prospects, and that, in turn, will have difficult consequences for public services and living standards. This is the background to the meeting that Rachel Reeves, the chancellor, says she will have shortly with her American counterpart, Scott Bessent. In principle, a US-UK trade deal would be mutually beneficial and, at least partially, undo Mr Trump's reckless tariff initiatives. In practice, Ms Reeves and her colleagues may find concessions on NHS drug prices, the digital services legislation, farming standards, higher drugs costs for the NHS and free speech politically unacceptable. Such a trade deal would create winners and losers – but would it be better than the new tariff regime applied to British exports? In the meantime, the government looks set to try to shield some sectors, as with the relaxation of the electric vehicle mandate and the prospective nationalisation of the steel industry, but the task of supporting economic activity through a global slump will be too much for the Treasury and the Bank of England. About the best that can be hoped for is an accelerated easing in interest rates and some cheaper consumer goods from China, Vietnam and other mass manufacturing centres landing in British markets, diverted from America (but with the concomitant risk of industrial 'dumping').
