Biden's tariffs threat shows how far Brexit Britain is from controlling its own destiny

What do lipstick, cravats, gold chains and poker chips have in common? The answer is that they are among a host of items that the US is threatening to impose punitive import tariffs on if the UK proceeds with its plan to implement a tax on big tech. The new duties are intended to raise $325m – the amount the US government believes the exchequer will raise from the 2% tax on revenues of tech firms.

In some respects, this is just part of the merry-go-round in international trade (though actual merry-go-rounds have also been slapped with new tariffs) as countries ruthlessly pursue their national interests. But it matters because it reveals Britain’s newfound weakness in international trade from outside the EU – and how that weakness may limit the ability of the government to curb the power of big tech.

Brexit was sold on a myth that buccaneering Britain would be able to use its freedom from EU structures to strike great new trade deals the world over. The problem was twofold: not only was it a daft idea that Britain would expand its exports by trashing its economic relationship with its most important trading partner, it was also simply untrue that agility would somehow trump scale in trade negotiations.

As this spat with the US shows, most trading relationships have a very clear dynamic: the larger and stronger party makes its demands, and the smaller and weaker party accepts what it must. That’s why the Brexit deal itself was so one-sided, with the EU securing almost all its objectives in the trade in goods, while Britain failed to achieve its goals in the trade in services. The data already shows that Brexit has been precisely the disaster its critics predicted, only occluded by the even greater crisis of the coronavirus pandemic.

Brexiters were seduced by some imaginary future where Britain and the US would somehow meet on equal terms. The idea the US would put our interests ahead of its own was always fanciful, based on nothing more than a puff of nostalgia for a transatlantic economic relationship that only ever existed in wartime. The dewy-eyed view of the “special relationship” has always been in London, not Washington.

As if to hammer home the point that scale matters, the US had initiated similar proceedings against the EU before deciding to drop them. This emphasises the reality of trade blocs in the 21st century: when two large blocs go head to head, the result is usually stalemate. That’s why there is no comprehensive trade deal between the US and EU, or either the EU or US with China.

The US response also shows the power of the big tech lobby. In polarised Washington, there are few points of agreement between Democrats and Republicans, and so it is particularly significant that this dispute was initiated by the Trump administration and yet still progressed by president Biden.

Rather than being a small victory for bipartisanship, it reveals that big tech has co-opted the federal government to advance its interests and to defend its monopoly positions. The power of platforms to reshape the economy is only set to accelerate as new automating technologies disrupt more and more sectors.

So EU membership offered Britain much more than merely preferential trading arrangements. It was also a means by which democratically elected governments could confront the power of multinational corporations, acting in the interests of their citizens and in the pursuit of economic justice.

No matter the rhetoric of the moment or the vaccine nationalism of this year, the stark reality is that Britain will need to pull closer to the EU in the future if it is to defend its own interests. That process will become a pathway back to membership, which is why so many Brexiters are so Europhobic despite Britain having already left. They know it is only a matter of time.

From climate breakdown to health security to the disruptive forces reshaping the economy, all the most interesting and important problems of the 21st century are collective-action issues. No amount of chest-beating and flag-waving can answer those substantive challenges. Only by working together with our friends and allies can Britain secure prosperity and justice for its citizens. A seemingly small dispute about trade tells us a whole lot more about the future than a fleeting glance might at first suggest.

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