More jaw-jaw – not war-war

WHEN Winston Churchill coined the phrase ‘jaw-jaw, not war-war’, he was suggesting that talking was always a good solution to fighting.

But what will happen if there is a trade war post-Brexit?

The difficulty for the UK is we will no longer have the protection of the EU trading block, and the USA is about to impose the biggest set of restrictions on trade for more than 40 years.

Donald Trump last week actioned his campaign promise of “putting America first”.

He is hoping to achieve this within the next few days when tariffs will be placed on aluminium at 10 per cent and steel at 25 per cent which is imported into the USA.

You may think that these tariffs are designed to prevent the cheap influx of Chinese steel into the USA.

However, Chinese steel imports into the USA count for less than three per cent which may come as a surprise to most people.

When the announcement was first proposed by Trump, there were no exceptions to the tariffs. He has since relented by exempting Canada and Mexico. This may be seen as a cynical ploy to help the USA’s negotiation of the North American Free Trade Agreement (NAFTA).

Given that the EU is one of the biggest exporters to the USA of steel and aluminium, it has hit back by announcing it will report the USA to the WTO. But as Trump announced these tariffs under the guise of statutes which provide that tariffs can be imposed for national security reasons, the WTO may not be able to do anything.

Of more concern is what will happen to the steel and aluminium which is destined for America once the tariffs start?

It will have to go somewhere, otherwise steel prices within markets will fall considerably.

No wonder the EU is considering imposing its own tariffs on American imports.

This is the thin end of the wedge. If you really want to protect your steel and aluminium market, you need to have safeguarding measures which will inevitably lead to the imposition of similar tariffs. This is how a trade war will start.

Let’s hope there is more jawjaw to prevent the trade war. Colin Rodrigues is head of the corporate team at

Hawkins Hatton