Rhetoric around enforcing tariffs in the name of “protecting” the domestic market is often a false narrative. It is invariably framed around bringing more business to domestic producers and manufacturers, leading to the protection of jobs. However, history has shown us time and time again that tariffs provide a short term, artificial boost in performance; followed swiftly by an inevitable decline in not only the domestic economy but also the global economy.
As the Member of Parliament for Solihull West and Shirley, my constituents will directly feel the repercussions of the decisions made in the United States. The proposed tariffs on cars, which come into place this week, and the looming threat of tariffs being placed on car components later this year will have a significant effect on the regional economy.
In 2023, in the Midlands region of the United Kingdom, more than 51,000 people were employed in the automotive sector. This accounts for 25% of the total UK automotive employment, and the highest regional concentration nationwide. Of that number, over 10,000 people are currently employed by JLR at their plant in Solihull — many of whom are my constituents.
This drastic shift in US policy towards the United Kingdom is a significant failure of diplomatic negotiation by our prime minister, who had previously pledged to do “whatever is necessary” to protect jobs in the steel industry. However, in spite of this commitment, the prime minister failed to negotiate with president Trump’s team for five months after his presidential election victory. To compound matters, he allowed the departure of Sir Crawford Falconer, the UK’s top trade negotiator to the US, without replacement.
If the prime minister had been effective in his negotiations with the President of the United States, we could have avoided a repetition of the Smoot-Hawley Tariff Act in 1930, which spelt disaster for the American economy and those who exported to the US; overseeing a 67% fall in both US exports and imports.
Pursuing protectionist policies, especially amongst long-term allies, can lead to unintended economic consequences for both sides. It opens the risk that, rather than suffer ruinous economic outcomes, nations look to forge new relationships with countries where they have less natural alignment on values and world view. In my view, this would be a mistake. At the very time there is growing geopolitical unrest in the world, we must deepen our ties with our longstanding allies.
The very real possibility of this scenario taking place has been escalated by the poor choices this Labour government has made since coming into office. A series of reckless policies introduced in the chancellor’s autumn budget, along with the introduction of the Employment Rights Bill, have left us with an economy less resilient to weather global economic storms. The danger is that it will lead to the ministers making unwise decisions to pull themselves out of their own self-inflicted fiscal hole.
The challenge to the government is clear. It must now urgently engage with Washington and get a free trade deal signed before irreparable damage is done to our country’s historic car and manufacturing sector.
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Source: Politics