…April 2025

April, as the poet TS Eliot noted, is the cruellest month. Markets around the world have been have been thrown into turmoil by Donald Trump’s trade war, while in Britain the month started with a triple whammy with sharp rises in council tax, energy bills and water rates. To make matters worse, Toblerone has discontinued its dark chocolate. 

And with the death of Pope Francis, one of the few beacons of light has gone out. Francis has given the Catholic church a rare gift: a fork in the road. But which route will the cardinals take? To continue his work to refocus the church back to the original mission that Christ gave Peter of standing up for those less fortunate than ourselves? Or turn back to the more conservative role of protecting the Catholic doctrine and ideology, most of which has come from man, not God? 

Then again, plenty of men have mistaken themselves for a God, building promises in the air and basking in the false idolatry of those even more foolish than themselves. This month has once again been entirely dominated by Trump and his ridiculous trade war. Everyday brings some fresh nonsense, garnished with more presidential lies. Unfortunately Trump is closer than he realises to the King Arthur from Monty Python’s Holy Grail film, complete with his comedy sidekick Vance clomping two halves of a coconut together for a make-believe horse. No one outside of America voted for this pair yet we’re all caught up in the slipstream. We can only hope that the losers we call leaders have enough common sense to ignore Trump and wait to see which US policies actually stick.

Trump’s latest trick has been to upend the global trading system by announcing tariffs on all goods from all countries entering the US but with different rates for each nation. The justification for this is that all these nations have been ripping off America. Trump’s twisted logic is a grotesque take on globalisation whereby developed nations have exploited third world countries to take advantage of lower labour and raw materials costs.  Trump even hit the uninhabited Pacific islands of Heard and McDonalds with tariffs. Worryingly, the US figures suggest that these penguin colonies are more productive than British workers and might be on target to realise a higher GDP than the UK.  

Predictably, Trump was forced to pause his tariffs for 90 days within a week following pressure from the bond markets that hold government debt. Essentially these traders assumed that Trump’s policies would lead to higher inflation and responded by pushing up their interest rates, automatically making it harder for the federal government to service its debt repayments. This is exactly the same issue that undid the former British Prime minister Liz Truss. But then, as all journalists know, what goes around, comes around…

As April closed, many countries revealed their GDP figures for the first quarter of this year. Italy’s GDP grew at 0.3 percent, Germany at 0.2 percent and France at 0.1 percent, while Spain and Lithuania both saw 0.6 percent growth. Ireland did even better, with growth of 3.2 percent. The EU as a whole saw growth of 0.4 percent, better than the 0.2 percent predicted, partly due to lower interest rates. However, the figures were inflated by a rush to ship goods into the US before the trade war got underway. This is particularly true for Taiwan, which saw 9.67 percent growth in Q1. That means that everyone is expecting the Q2 figures to be much worse when they are released. This is already leading to a drop in the price of oil. 

So far the initial analysis of Trump’s tariffs by the International Monetary Fund – that America would be the biggest loser – has proven true with the US GDP figures showing a huge slump, down from 2.4 percent growth in Q4 2024 to a 0.3 percent contraction in Q1 2025. Predictably Trump has blamed this on Biden, but just about all other analysts have attributed it to the surge of imports caused by the tariffs. There’s no guarantee this will be improved in Q2 since the tariffs will almost certainly lead to higher prices in the US and an increased risk of inflation.

Trump cheerfully announced that “no other president would have done what I have done,” which is entirely true because no other president has ever been this reckless and stupid. His bet is that companies will start manufacturing inside the US to beat his tariffs, bringing jobs to the US market. But business is like water; it always takes the easiest path. Building factories and setting up supply chains and distribution networks is expensive. And the US, with its high labour costs, is not the most attractive place to make things. Many companies may simply decide it’s more profitable to increase their trade to other countries. Besides, American-based factories will be less useful for exporting if other countries add their own tariffs to counter those from the US.

There is a fundamental truth that has been largely ignored; America is simply not as reliant on international trade as other countries. On the one hand this means that a trade war will hurt America less than some other countries; but on the other it means that America has less global influence than it thinks it does. American companies with overseas manufacturing will still be able to export products, such as Nike shoes or Apple iPhones, direct from their factories in Asia to other markets without any tariffs. The only impact will be on their home US market when they try to import those products.

Trump continues to claim that other world leaders are lining up to do deals with him but this is not really credible since he has blinked several times during this crisis, pausing or reducing various tariffs. It would make far more sense for other leaders to simply wait and see how much of the trade war Trump is willing to walk back before attempting any kind of negotiation. Even then, it’s hard to see any real value in dealing with someone as capricious as Trump.

Over in Canada, Trump’s threats to annex the country has left Canadians so enraged they’ve elected the technocrat and former banker Mark Carney as prime minister. He has described Trump’s tariffs and threats to annex Canada as “the American betrayal” and promised to work closely with other nations to forge a new post-American trading partnership. Jim O’Neill, a former UK treasury minister and chief economist at Goldman Sachs, has suggested something similar, saying: “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.”

The reality for Britain is that its economy is just too small to weather alone the global storm now brewing. But Brexit has cut Britain adrift from the EU, while Trump has killed off the dream of closer trade ties with the US. The other obvious option, China, is fraught with danger. This was brought into sharp relief in April by a row over British Steel, which is owned by the Chinese company Jingye and operates Britain’s last two blast furnaces. As stocks of raw materials ran down, The British prime minister, Keir Starmer, was forced to call an emergency session of Parliament, saying there was no time to waste, after several weeks of prevarication. The plant came dangerously close to permanent shut down which would have left Britain as the only G7 country unable to produce its own primary steel. That begs the obvious question – did the Chinese owners see this simply as a negotiating tactic, or as a strategic aim of the Chinese state? 

The underlying problem is that many ministers have previously measured the value of manufacturing industry under the single metric of profitability. The renewed focus on defence has reminded the government that manufacturing in general, and steel making in particular, is a strategic necessity that should have been protected from free market ideology.

It’s perhaps worth noting that India already holds the other half of Britain’s steel industry, Tata Steel. And Britain is courting closer ties to India as the two countries gradually edge ever closer to a trade deal. According to Politico, India’s trade chief Piyush Goyal told attendees at a recent business roundtable in London that “25 of 26 matters have been agreed”. 

There is also some talk of a reset in relations between Britain and the EU. Neither side wants to revisit the tortuous Brexit negotiations but the demise of the previous Conservative government has at least created a warmer atmosphere. The uncomfortable truth is that both Britain and the EU need each other, with closer cooperation in both military and economic terms no longer seen as a luxury. 

The UK can at least claim one win, as the American entertainments company Universal Studios is to open a fantasy theme park in Bedfordshire, UK. This is separate from Donald Trump’s use of the rest of the world as a fantasy theme park, which is starting to have dangerous repercussions. The Israeli government does seem to have embraced Trump’s vision for turning Gaza into the riviera of the Middle East, or at least the part that envisages kicking out the Palestinians.

There is credible evidence that Israeli soldiers have killed 15 Palestinian aid workers, some of whom appear to have been executed, which would be a clear war crime. At the same time, Israel has blocked all aid from entering Gaza. Israel had every right to defend itself after the heinous Hamas attack in October 2023. But it now looks very much as if Israel is equating the Palestinian civilians with the Hamas terrorists and punishing them accordingly. If proven, this would be an act of genocide and a crime against humanity. Israel’s case has not been helped by blocking journalists and independent observers whilst making wild accusations against the UN. 

It is also making it harder for Western governments to justify their support for Israel to their own people. And in the wider context, this issue is driving a wedge between the West and the Global South countries at a time when the West really needs to find new partners in the post-US world.

Somehow, in the midst of his busy schedule sowing mayhem around the world, Trump has found time to step into the Russian/ Ukraine war. He has now reframed the $160 billion or so of military aid that was given to Ukraine as merely a loan for $350 billion that has to be repaid, and attempted to mask his efforts at extorting this money by pretending to broker a peace deal. Trump’s efforts at securing peace have mostly revolved around trying to pressure Ukraine to surrender to Russia’s demands.

He does seem to have slightly shifted his position after a meeting with Zelensky at the Pope’s funeral in the Vatican and has just signed a minerals deal with Ukraine. This appears to commit the Americans to supply more military aid to Ukraine though who can tell how reliable that might prove? Trump has also tried to put pressure on the Russians by threatening to call Putin a loser if he doesn’t agree a peace deal. One can only imagine the panic inside the Kremlin.

Even Trump’s efforts to protect American social media companies appears to be failing. The EU’s Digital Markets Act has taken a bite out of both Apple and Meta, issuing fines of €500 million and €200 million respectively for non-compliance. Teresa Ribera, the European Commissioner for Competition, explained: ”Apple and Meta have fallen short of compliance with the DMA by implementing measures that reinforce the dependence of business users and consumers on their platforms”. The DMA gives the EU the ability to fine companies up to 10 percent of their annual turnover worldwide.

The British government has toyed with offering Trump some concessions to its own Online Safety Act but seems to have given up because of a lack of progress with Trump. Indeed Starmer and his chancellor Rachel Reeves have frantically sought some kind of trade deal for Britain, but Trump does not seem in any hurry. Instead he is making bizarre demands such as having the Open golf tournament moved to one of his courses, for his own personal enrichment. It’s almost funny watching the former lawyer and public prosecutor Keir Starmer trying to appear serious in the face of such naked corruption.

But then there is a deeper problem in dealing with the US, as Trump has shredded the nation’s credibility with its allies. Trump is delusional. He is not the great deal maker – more like a very naughty boy. He is a known liar and convicted felon who has also been found liable for a sexual assault. He has dismantled the initiative to persuade Iran against developing nuclear weapons and given all of America’s enemies a good reason to acquire such weapons as the cards necessary to prevail in a conflict. Even America’s former allies are now planning for a post-American future where they are no longer reliant on US support, both militarily and economically. Increasingly the question to be asked is going to be, just how diminished will America be after Trump?