Trump presidency could move indy back up political agenda

By definition, increasing the prices of goods imported into the US by imposing tariffs will increase inflation, which only fell below 3% a few months ago. Cutting income taxes will inject additional demand into the American economy, likely increasing inflation. The long-term consequence could be a slowdown of American economic growth as Americans find themselves unable to continue consuming goods and services at the same rate. The National Institute of Economic and Social Research in the UK has projected that the tariffs would cut US GDP growth by between 1.3 and 1.8 points over the next two years.

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None of this would be good for American consumers, and none would be good for America’s allies. The UK would be particularly badly hit. Ours is an open, mid-sized economy that relies on an open international trade system. The NIESR’s analysis suggests that UK growth could be cut by 0.5 points and 0.7 points in the first and second years of the tariffs. That would cut our GDP growth from 2% to 1.5% next year and from 1.8% to 1.1% in 2026. The NIESR also found that UK inflation would be three to four points higher, and interest rates would likely rise.

For a new Labour Government that has bet big on being able to get the economy growing while keeping prices down, this would be a disaster. The UK, like most Western liberal democracies, has been embroiled in a legitimacy crisis for several years. Voters feel that the government is not delivering for them, does not care about them and that their votes cannot bring about meaningful change. That deep lack of trust in British institutions has driven the increasing popularity of outsider politics, populism, and political parties seeking to capitalise on that trend. More than any other factor, this is why the combined 57.4% Labour and Conservative vote share at July’s General Election was the lowest since 1910.

If Labour is seen to have failed to right the ship, the crisis of legitimacy in British politics will deepen. Many voters will swing back to the Conservatives under Kemi Badenoch’s leadership, particularly in England. Many others will jump to Reform UK on the right and the Greens on the left. Some will flow to the Liberal Democrats. In short, the British party system will fragment further, and Labour’s large but thin majority will rapidly come under threat.

Sir Keir Starmer’s first major electoral test will come in 2026, when Scotland and Wales will go to the polls to elect new devolved legislators. Labour’s support in both nations has waned since the election in July. In Wales, Labour are now just a point ahead of Plaid Cymru. And in Scotland, Labour now trail the SNP by 10  points in the constituency vote and seven points in the regional list vote. If a Scottish Parliament election were held tomorrow, the SNP would win 52 seats to Labour’s 29.

The great danger in this scenario - or opportunity, depending on your perspective - is the prospect of a 2029 General Election in which we face the prospect of a return of a right-wing government at Westminster, whether Conservative, Reform, or a coalition of the two. Scotland would not face a choice between an unpopular Labour government and the return of the Tories to power, as we would be unlikely to be in a position to swing the result. Rather, Scots would face a choice between sticking with England’s choice on that question or swinging behind more radical options like secession.

Certainly, independence would be driven back up the political agenda if the change Scots voted for in July fails to materialise, and the deadlock between the pro- and anti-secession camps in public opinion could be broken. There would be strong countervailing pressures: President-elect Trump’s victory also threatens to fragment the European security architecture, and a more dangerous world would provide ample arguments for sticking with the Union.

Trump's trade policies could hobble Labour's plans for growth (Image: PA)

However, if we have learned one thing from the elections and referendums held across liberal democracies since 2016, it is that emotional motivators like anger can be far stronger determinants of political behaviour than rational or data-led arguments. Secession might pile greater economic pain on top of anything President-elect Trump’s trade policies could inflict, but good luck successfully arguing as much.

For the sake of their political future, the long-term survival of the Union, and most of all, the well-being of the people of the UK, it is incumbent on Labour to find a way to protect the UK economy from President-elect Trump’s proposed trade policies. There are two places to focus on in order to do so.

The first is our relationship with the US. Efforts must be made to carve out tariff exemptions for key UK export industries, including the whisky industry which exports roughly £1bn of goods to the US annually. Better yet, a deal that avoids new tariffs entirely.

But we must also prepare for the worst. We have the world’s second-largest market across the Channel and have spent the past eight years hobbling our ability to export to them. Rejoining even the Customs Union or Single Market, never mind rejoining the European Union, would be fraught with political risk. But the risks posed by inflation and non-existent economic growth are infinitely greater. Labour should seriously reconsider its position on our relationship with the EU.

President-elect Trump’s trade policies will throw a grenade into the international trading system, and the blast will hammer the UK economy, with significant consequences for our politics. Labour must be ready.

Mark McGeoghegan is a Glasgow University researcher of nationalism and contentious politics and an Associate Member of the Centre on Constitutional Change. He can be found on BlueSky @markmcgeoghegan.bsky.social