Home Covid-19 Oh Lordy Be, No, Let's Not Have Trade Wars

Oh Lordy Be, No, Let’s Not Have Trade Wars

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Certain economic ideas are so bad that both sides of the political aisle seems to like them. So it is with trade wars and reactive tariffs. Us imposing tariffs upon imports into this country makes us, in this country, poorer. This is not a useful threat to use at Johnny Foreigner. But use it people demand that we do:

Ursula von der Leyen, President of the European Union Commission, is threatening to escalate the growing vaccine war between Britain and the rest of Europe over supplies of the Oxford-AstraZeneca jab. At a meeting of ministers on Thursday she may well invoke emergency powers to block exports from the continent.

But hold on. It is surely impossible for any British government to accept that without retaliating. We shouldn’t block the shipment of vaccines or their ingredients to Europe. That will simply cost lives on the continent, and two wrongs never make a right.

Instead, the UK should borrow a trick from the United States. Smart tariffs. We should unveil, by Thursday morning, a list of immediate, emergency levies that will be applied on EU exports to the UK, such as cars, foods, wine, clothing and machinery. With luck, they won’t have to be imposed – but the threat of “smart tariffs” may well be enough to ensure vaccine supplies keep flowing.

That’s from the Telegraph of all places.

As Joan Robinson pointed out some decades back the correct reaction to someone putting rocks in their own harbours is not to place more in your own.

Or, for the hard of understanding. So, we impose a tariff on something coming into the UK. That makes that something coming in more expensive. That means that we as consumers must pay more to have that thing – we consumers are worse off.

But it gets worse than that. All our domestic producers are kept – at least partially – in line by that foreign competition. That J. Foreigner will sell us brie at a reasonable price keeps our local producers of Wensleydale, Cheddar and, yes, brie at a slightly lower price than they would be in the absence of that competition. So, even if none of that foreign muck comes in because the tariffs are too high for us to buy any of it we still suffer – all the local muck also goes up in price. We Brits are made worse off by tariffs upon imports into Britain.

So, now let’s run the threat again with our new understanding. Ursula, foul-fiend bureaucrat that she is, tells us that she is going to make us worse off by denying us access to those lovely foreign made vaccines. Har Har, suffer Roast Beefs! Our reaction is that we’ll make ourselves suffer some more by denying ourselves access to those lovely foreign made goods.

Hmm, such a threat that they’re break down and sob at the negotiating table, right?

Or, you know, we could not stab ourselves in the front and just not make ourselves worse off. Your choice, obviously, but reason only leads to one of those two solutions as being useful.

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12 COMMENTS

  1. With more vaccine on order than is needed to jab everyone in the country twice, with two factories producing in the UK, and with all cause fatality near a record low, the smart move would be to divert those we’ve ordered from EU territory to those EU nations most likely to be appreciate it.

  2. Good god. “If you shoot your people, we’ll be forced to shoot our people”. These people are insane. Can’t we just let them shoot their own people and ignore them, like we did with the Irish Trade War.

  3. Keeping the moral high ground and people supplied with brie de meaux* is all very well, but we can’t let the EU sniff any weakness in our response to its various malign actions.

    The vaccines furore has rather overshadowed ongoing attempts to screw UK exporters at every turn. This has nothing to do with the structures in place, but is an obviously deliberate plan to ruin UK exporters.

    I’d be happy as a consumer to accept short term pain, or to seek alternative products, in order to retaliate. Perhaps once individual EU nations start getting it in the neck from their exporters, they will make the EU behave more reasonably. If not, eff ’em, I am very fond of South African wine.

    * buy Baron Bigod instead – marvellous stuff

  4. I would say, don’t export the ones we have ordered from EU to UK, just park them in a warehouse somewhere in Europe.

    Except those warehouses are already full of vaccines the EU has and isn’t using.

    An odd odd world.

  5. I do get the idea that cheap imports make our lives better. However, if the EU imposes tariffs on our exports that does hurt businesses and people here. If you were the one who lost 20% of your business due to EU tariffs you might think differently about that. And it does seem that the threat of tariffs on their goods causes them to hesitate.

  6. And, of course, the EU, by reneging on contracts reveals themselves to be not to be trusted in any future business dealing. So we can (a) pursue them through the Courts, (b) find someone who does support the sanctity of private contract to make the jabs for us (possibly India?) and (c) carry on enjoying Champagne at a low(er) price. It’s the EU doing the foot shooting. Reputation is everything.

  7. If the idea is to dissuade the silly buggers who think that tariffs are a weapon, it’s not unreasonable to threaten them in terms they might understand. You want them to understand the concept of “retaliation”, not give a lesson in economics.

    I’m not suggesting that’s what it is currently happening, but just sayin’.

  8. Not to pick a nit, but…Ursula is dancing about the idea of a blockade and the DT is musing about extremely specific tariffs.

  9. Ursula von der Leyen is creating a big smokescreen to try to hide the mess that she and her minions have made over vaccination. Boris should just stand still (or even sit) on the moral high ground and re-announce plans to *give away* surplus vaccine doses to third world countries according to levels of poverty and infection rates. He could add that he will give all the Glaxo-Sanofi vacccine doses he has ordered to the high-death-rate countries in south-east Europe, whether or not they are members of the EU (Czechia, Slovakia, Slovenia, Bosnia-Herzogovinia, Croatia, Montenegro, North Macedonia, Hungary, Romania, Bulgaria) as soon as Sanofi sorts out the clinical trials and gets it approved (by then the whole of the UK adult population should have been vaccinated. [Quietly slipping 70k doses to Gibraltar which is even worse hit than Belgium should be an unannounced priority].
    The EU should be left looking like a sulky child.

  10. “The point of trade is imports not exports” fallacy again. Just say that my wife and I were Turkish biochemists who have created a COVID vaccine. We can sell our vaccine to the 83 million Turks or to the nearly 8 billion citizens of the planet. Or, I am a German who makes high-performance cars. Every year I can sell ten thousand to those Germans out of 83 million who want and can afford these cars, or I can sell them to the couple of hundred thousand international buyers. Or, I am a software developer. Every year I can sell a couple of million operating systems to my fellow Washingtonians, or I can sell a billion to geeks worldwide.

    No, the point of trade is not imports, or even exports. It is to expand markets.

    When some a$$401e wants to restrict those markets, by all means, bring on the trade wars.

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