We’d side with EU against Trump in trade war, suggests Cabinet minister

Britain would side with the European Union over the US if Donald Trump sparked a trade war with China, the Business Secretary has suggested.

Jonathan Reynolds said the scale of the UK’s trading with the bloc meant the Government would be required to “weigh the consequences” of any action that would create an “adverse relationship” with Brussels.

Mr Reynolds’s comments suggest the Government will prioritise appeasing the EU if Britain finds itself in the middle of a heated trade war once Mr Trump re-enters the White House.

The president-elect is reportedly considering imposing tariffs of 60pc on Chinese products sold to US companies, in addition to up to 20pc on all imports from all other countries.

Experts have raised concerns that such a move could spark a global trade war. Christine Lagarde, the European Central Bank president, warned on Monday that the single market was “under pressure from significant shifts” in the geopolitical landscape.

Addressing the House of Lords International Agreements Committee on Monday, Mr Reynolds said: “To state the obvious, tariffs on UK goods entering the US would be a difficult thing for us to have to contend with. The US is a major and important trading partner for the UK, £300bn of bilateral trade.

“But compared to the EU with over £800bn of bilateral trade, clearly if there are things that we are offered or asked to do that would result in an adverse relationship on the European side, we’d have to weigh the consequences of that.”

Mr Reynolds added that Britain would be “much more exposed” in a trade war with Beijing than the US.

He said: “We have just got to be clear with the British people that if there were to be a much wider trade confrontation between China and the West, as a much more globally orientated trading nation the UK is much more exposed than say the US.

“So simply being asked to replicate what another country is proposing might be a much more painful proposition for the UK than it might first appear to people not aware of just how trade-intensity affects our economy.”

Mr Reynolds’s comments risk a diplomatic row at a time when Labour is seeking to repair relations with the president-elect.

They come just days after Andrew Bailey, the Governor of the Bank of England, said the UK must rebuild relations with the EU as he claimed Brexit had undermined the British economy and warned Mr Trump’s tariffs would hurt global growth.

Maxwell Marlow at the Adam Smith Institute warned that prioritising Brussels over Washington would risk squandering a “rare opportunity which we should be grasping with both hands”.

He said: “The EU has become synonymous with heavy handed, growth-killing regulation and red-tape – America on the other hand has embraced creative destruction, innovation and dynamism.

“The UK must be part of innovation-story – saddling up with degrowth Europe is to make us poorer and to annoy our larger American partners. The Government should embrace the special relationship and rebuff calls for tariffs with a full-fat free trade agreement with the USA.”

It came as Sir Keir Starmer met with Xi Jinping on Monday to discuss trade opportunities in the first such meeting between the UK and China since 2018.

In talks held on the sidelines of the G20 summit in Brazil, President Xi appeared to endorse Labour’s economic plan as he said the UK Government was “working to fix the foundations of the economy”.

According to a translation in the room at the top of his meeting with Sir Keir, the Chinese president said: “The world has entered a new period marked by turbulence and transformation.

“As permanent members of the UN security council and major global economies China and UK share the dual responsibility of advancing our respective national development and addressing global challenges.

“The new UK Government is working to fix the foundations of the economy and rebuild Britain and has set the vision of Britain reconnected.”

However, the meeting drew criticism from the Tories, with Sir Iain Duncan Smith accusing the Prime Minister of “kowtowing” to “the world’s greatest threat to the democratic global order”.

The Tory former cabinet minister, who has been sanctioned by China over his criticism of Beijing, told the Daily Mail: “This is very sad. Those suffering genocide and slave labour under the brutal hands of Xi will feel betrayed.

“This is very sad. Those suffering genocide and slave labour under the brutal hands of Xi will feel betrayed.”

James Cartlidge, the shadow defence secretary, said there needed to be a “constructive” dialogue between Britain and Beijing, but warned the UK must “recognise the huge threat” posed by China.

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