Jim O’Neill, the former Goldman Sachs chief economist and former Treasury minister, has said Britain and other non-US G7 nations should respond to the Trump tariffs by deepening their own free trade links.
In an interview on the Today progamme, he said that it was perfectly feasible for leading nations still committed to free trade to in effect sideline the US, and trade more with each other.
O’Neill, who served as a Treasury minister in David Cameron’s government for a year and who is now a crossbench peer, said that G7 countries could take the lead in this, but that India and China should be included too.
He said the government was right to carry on talks with the US about a possible trade deal. But he went on:
But I think our approach should be to slightly stand back and think, what does Britain want, and can it get from the rest of the world, and what can we contribute?
And in that regard, it’s important to realise that the rest of the G7, except the US, collectively are the same size as the United States. And I would have thought a very sensible thing to be doing is having a serious conversation with the other members about actually lowering trade barriers between ourselves, especially for cross-border services, which is what the UK has a marginal advantage in, which would be very healthy for all of those countries because it’s the one area of global trade where most countries haven’t done enough in.
O’Neill said that the US was on a “kamikaze path” and that its tariffs were “rather insane”. But other countries had the clout to resist, he suggested.
Asked if it was possible to just ignore the US, he replied:
The US is the biggest economy in the world still, but it’s not anything like as important for global trade as it is in global finance and global security.
So if the US wants to do this [impose global tariffs], then it’s perfectly within the bounds of feasibility for other large economies to structure themselves, stop this addiction to the US consumer, and start to consume more themselves, as well as between each other.
O’Neill said, by turning his back on free trade, Trump was turning his back on “the major thing which has made the United States so prosperous over the last 40 to 50 or more years”. Other countries “shouldn’t get sucked into the same game”, he said, because overall, “whether it’s life expectancy or wealth”, the whole world has benefited from this model.
The Liberal Democrats and the Greens have both said Keir Starmer should respond to the Trump tariffs by strengthening economic links with countries like Canada and the EU. But Starmer has rejected this idea, saying it would be wrong to choose between being close to the US and being close to Europe.
