Whatever mistakes you’ve made this week, take solace in the fact that you didn’t wipe $2.5 trillion of value off Wall Street and drive your country towards recession. And that’s ignoring the damage inflicted across the globe. No, that was Donald John Trump, the 47th President of the United States.
While on the face of it we got off relatively lightly, make no mistake: this is bad news for Britain’s entrepreneurs. While we ‘only’ got hit with 10% tariffs, our economy does not exist in isolation. When markets around the rest of the world stutter, so too will our own. These tariffs will destroy trading relationships for millions of individual firms, which may take years to adjust to – if at all. Positive-sum gains accrued from specialisation and exposure to international competition will evaporate.
As I’ve argued on these pages before, the government should be unstinting in its promotion of free trade around the world: “Free trade might be a little passé these days, but we shouldn’t forget the lessons of our forebears like Adam Smith who demolished the mercantilist worldview in the Wealth of Nations, and Richard Cobden, who tirelessly campaigned for free trade for the good of the poorest and to broker peace between nations.”
The methodology Trump’s team has used to impose tariffs is nothing short of madness. Despite claims to the contrary, they didn’t calculate tariff rates and non-tariff barriers. Instead, they just took the US trade deficit for each country and divided it by the country’s exports.
The tiny island of St Pierre et Miquelon got slammed with a 99% tariff because somebody bought $3.4 million worth of crustaceans in July 2024, but your deepest sympathies should go out to the entrepreneurs of Vietnam and Thailand and their populations, who will suffer deeply from these tariffs, both through direct exposure to US imports, but also indirectly via exports to the US through other countries.
There’s simply no escaping Econ 101. Trump needn’t have even pulled himself away from his TV addiction to learn this. Ferris Bueller’s Day Off does a good enough job of explaining why the Hawley-Smoot Tariff Act of 1930 – legislation that raised tariffs on imports in an attempt to protect American industries and generate more revenue for the government – worsened the Great Depression by stifling international trade rather than helping the economy recover. Anyone…? Anyone…?
Mark my words. Trump’s tariffs will fail. Perhaps we can take solace in The Economist’s Mike Bird’s insight that aggressive protectionism is often followed by a long backlash: “The Corn Laws, Smoot-Hawley, and interwar European trade restrictions sparked the resurgence of free-trade liberalism in the generations that followed them.”
Jolly Good Fellows
Defeating Trump’s mercantilism and equivalents in the UK will require a lot of people to put up a strong fight. To that end, it’s great to see our good friends at UK Day One expanding to create the much-needed Centre for British Progress. I’m delighted that Anastasia Bektimirova, our Head of Science and Technology, has joined as one of their Fellows. I strongly recommend reading their long read Rediscovering British Progress.
Party Time
The All-Party Parliamentary Group (APPG) for Entrepreneurship will soon be back, with Tris Osborne MP (Labour), Victoria Collins MP (Liberal Democrats), Lord Leigh of Hurley (Conservative) and Lord Bilimoria of Chelsea (Crossbench). As the Secretariat we’ve got big plans, so how can you get involved?
First, if you’re an MP or Peer, you can still become a Member. Get in touch with our APPG Coordinator, Jessie, to let her know.
Second, if you or your company supports entrepreneurs you may want to support the APPG. We are looking for up to four supporters for 2025/26. Drop me an email so I can send through more information.
Third, if you represent entrepreneurs, you may be able to join our Advisory Board. We catch up every month to discuss policy issues, research and events relating to all things entrepreneurship. Drop Eamonn Ives an email to find out more.
Fresh Thinking
Another week, another new Adviser. This week, I’m pleased to announce that James Callander, Managing Director of Freshminds is joining our growing ranks. As he says:
“I have always been super enthusiastic about the world of business and entrepreneurs – while it can be hugely risky and not for everyone, I think that running your own company is a wonderful privilege and something we (as a society) should encourage as an engine of job and wealth creation.”
If you’re keen to join James as an Adviser, get in touch.