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Brexit brings dire warnings for Trumpism
When Britain voted to leave the European Union in 2016Donald Trump, then Republican presidential candidate, declared himself “Mr. Brexit.” Trump claimed solidarity with the nationalism, isolationism and anti-immigrant fervor that motivated Brexit advocates and incorporated them into the America First platform he adopted after winning the 2016 presidential race.
Britons now see their populist experiment as an abysmal failure. Brexit champions like former Prime Minister Boris Johnson have promised to break political and economic integration with most of the rest of Europe increase prosperity and self-sufficiency and leave more money for government services.
Instead, the The UK economy has stagnatedwith lower income and economic growth than they would otherwise have been. These effects are likely to worsen by 2035. Most British people are suffering now “Bregret”, with research in early June showing a record 69% of Britons thought Brexit was the wrong decision. The fiasco is a major contributor to the collapse of Prime Minister Rishi Sunak’s Conservative government — and the party’s likely defeat in the upcoming July 4 elections.
It’s like watching a lab experiment where the test subjects die. Yet Trump still sounds like Mr. Brexit, promising that if he wins a second term, he will impose even more trade barriers, more isolation and more self-restraint than he did during his first term.
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Trump wants to add new 10% tariffs on all imports into the United States, while increasing the tariff on China by 60%. There is no evidence that the tariffs Trump imposed during his first term have achieved anything, other than increasing costs for Americans and somewhat impeding economic growth. But Trump is not intimidated.
Trump also promises severe new limits on immigration to the United States, along with unprecedented deportation of migrants with expired visas or other unauthorized status. This despite lots of evidence that immigration has been a major driver of growth, job gains and government tax revenue since COVID-era restrictions on inbound migration ended.
Was he right? A dog accompanies an anti-Brexit activist in 2020. (AP Photo/Kirsty Wigglesworth) (ASSOCIATED PRESS)
Wall Street is booing much of Trump’s economic agenda. Businesses like the lower taxes and lighter regulations Trump offers. But they generally hate his protectionism and other Brexiteer impulses.
Goldman Sachs It is Morgan Stanley have published recent analysis warning investors to brace for slower growth and higher inflation if Trump wins. Inflation has fallen sharply from its 2022 peak of 9%, raising hopes that the Federal Reserve could start cutting interest rates soon, which would provide a much-needed respite for homebuyers and other borrowers. But Oxford Economics points out that Trump’s inflation outlook could force the Fed to delay cuts for longer than it otherwise would — and even raise rates further if Trump forces prices higher through tariffs and other measures.
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The parallels between Brexit and Trumpism are not perfect, but there is a clear common thread: long-standing and widespread disgust with the status quo. In America, Britain, France, Germany and elsewhere, millions of voters — in some cases a critical mass — feel that the system is rigged against them and that current leaders are part of the coup.
Immigrants are easy bogeymen for politicians to flatter. UK prepares for 2016 Brexit referendumMany Britons resented immigrants from poorer European nations who took advantage of Britain’s national health system and other government benefits. Keeping some migrants out would mean giving up the many benefits of belonging to the EU union, but most felt it was worth the cost. Boris Johnsonopposition leader Nigel Farageand other Brexit supporters insisted that the UK would be better off with fewer migrants.
Trump, of course, is selling a similar message. “He opened the borders,” Trump said of Biden in the July 27 presidential debate. “We’ve got to get a lot of these people out, and we’ve got to get them out quickly.” Even Biden seems to recognize how concerned U.S. voters are about migration, given that he now issued an executive order which reduced the number of border crossings.
One lesson from Brexit, however, is that silver bullets rarely work.
Leaving the EU turned out to be an immensely complex task that destroyed trade efficiency and produced none of the better alternatives promised by its supporters. Companies are begging Britain would have to somehow undo what had been done, or they would have to leave.
Inbound migration, however, reached new records after the UK finally left the EU in 2020. COVID and other changes drove some of this, but it also turned out that British companies needed more lower-cost workers than Brexit’s designers had anticipated. Since reduced migration was an explicit goal of the scheme, Brexit has brought the British many unintended consequences without the intended ones.
Why would the United States want to repeat such a mess?
Oh, we wouldn’t do that, insist Trump and his isolationist cronies. We are bigger and more powerful than the UK. Other nations will have no choice but to deal with us on our terms. We can increase costs in one place because we can offset them in another.
Amexit will be much better than Brexit.
There is a better way to deal with the real problem of middle-class Americans being left behind. Keep what works—free trade and legal immigration, among them—and tackle market failures one at a time. There are many smart proposals for fix the broken parts of the immigration systemfor target China’s abuses and trade practices is for raise the living standards of the working class. But these solutions are weak, unattractive and very boring for Mr Brexit.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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