Cometh the hour, cometh the man. It is not only Canadians who should count themselves fortunate that, through domestic political happenstance, Mark Carney became prime minister of Canada at exactly the moment that his skills and experience were needed to counter the extreme threat posed by Donald Trump to global stability. The Rest of the West, and indeed the rest of the world, should be grateful for this fortuitous timing.
It is not just that Carney, having served as governor of two central banks, has a greater grasp of the issues at stake of any current global leader. It is also that as governor of the Bank of England during the Brexit years he has direct experience of dealing with dangerously ignorant populists who have somehow managed to grab hold of the levers of power in a G7 country and accidentally trigger a monumental act of economic self-harm.
Indeed, if Britain had not had someone of Carney’s global stature leading the BoE at the time of Brexit and the years thereafter, one can be quite certain that the damage to the UK economy would have been considerably worse. Carney’s presence sent a reassuring signal to global investors that Britain’s institutions were holding up. That is why the Tories twice had to beg Carney to extend his term despite his barely concealed contempt for the carousel of clowns that occupied high political office during that period.
Already Carney has delivered a masterclass in how to deal with Trump. As you would expect from a pugnacious former ice hockey player, it involves squaring up to the American bully. Carney’s robust response to Trump, including his historic warning to Canadians that their previously close relationship with America was over and his promise to retaliate against US tariffs, has already led the president to back down twice. First, when Trump dropped his disgraceful references to the Canadian prime minister as “Governor” and talk of making Canada the 51st state and, second, last week when Canada was exempted from “reciprocal tariffs”.
Now in a new speech Carney has offered to head a coalition of the willing including those other erstwhile US allies in the Rest of the West hit by Trump’s deranged tariff policies. Other countries should take up his offer as a matter of urgency. We know that a coordinated effort by Canadians, Europeans and like-minded countries in Asia is the right way to respond to Trump’s coercion because Trump himself has told us. In one of his middle-of-the-night Truth Social emissions, he warned:
“If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!”
Of course Trump doesn’t want countries coordinating because that makes it much harder for him to bully them. He made similar threats of further extreme tariffs against China if it dared to retaliate, yet when Beijing imposed its own 34 per cent reciprocal tariff on US imports last week, Trump limited himself to an all-caps Truth Social complaint that “CHINA PLAYED IT WRONG, THEY PANICKED”. That was followed by another post the next day, reassuring Americans that China had been hit harder than the US and urging them to “HANG TOUGH”. It seems pretty clear that Trump blinked.
Besides, there is a more important reason why other countries should accept Carney’s offer to work together beyond simply coordinating retaliation. The overriding objective must be to preserve as much of the global rules-based trading system as possible to prevent it from collapsing into chaos. It is not just that individual countries dealing with the Trump administration risk being saddled with ridiculously one-sided deals requiring concessions far beyond trade. It is that ludicrously distorted US trade barriers, if they persist, risk dangerous second- and third-round effects on trade flows that could damage everyone.
Hopefully, other countries will recognise the danger and take up Carney’s offer. Yet one government seems determined to go its own way. Alarmingly, much of the British establishment appears to have succumbed to its customary Brexity, cod-Churchillian delusion about the special relationship and seems determined to prostrate itself before Trump in the expectation of a deal. Indeed, most abjectly, the government appears to have convinced itself that even the 10 per cent tariff with which Britain has been hit is somehow tribute to its own negotiating prowess, even after Trump’s nonsensical tariff formula has been exposed to global ridicule and it became clear that Britain was treated no differently to anyone else.
The risk is that the British government, egged on by the myopic advice of the right-wing media to whom it consistently shows baffling deference, becomes so fixated on securing a US trade deal that it loses sight of the wider picture. The overwhelming British national interest is not in seeking some minor mitigation from Trump’s tariffs on UK exports but on getting Trump to call off his entire ruinous trade war with the rest of the world.
Although Britain is going to be tariffed at half the rate of the EU, many City economists reckon that it faces just as big a hit to growth—if not bigger. UBS, for example, is forecasting that both UK and eurozone growth will be 0.4 percentage points lower this year than it had previously predicted.
What’s more, one can be certain that any deal the Trump administration does offer Britain will be designed to create maximum mischief by sowing division between the UK and the EU as the former attempts to reset its relationship with Europe. There are bound to be far greater economic advantages in reversing some of the Brexit damage through a much bolder renegotiation with the EU than is currently being contemplated (thanks to Keir Starmer’s “red lines”) than anything on offer from Trump. That should be the British government’s overriding priority—as Carney would no doubt be pointing out robustly were he still in Britain.
