Starmer’s ‘nothing’ deal with Trump is a warning sign for Albanese

The first question to Donald Trump after announcing his “historic” trade deal with the United Kingdom came from a British reporter who, in a classic case of English versus American sensibilities, asked the president: Aren’t you overselling this?

Of course, he was. But Trump oversells everything. In that sense, he is the quintessential American, in direct contrast to the British tradition of understatement.

Donald Trump listens to Britain’s ambassador to the US, Peter Mandelson, in the Oval Office.Credit: AP

In this case, though, Britain’s Keir Starmer is just as guilty – if not more so. Not only is he portraying this as a massive win for British workers, but he described it as a historic moment between the two countries, up there with VE Day, which occurred on the same day 80 years ago.

Well, an armistice it ain’t. This is a list of concessions more than a trade deal, and one in which the UK is still subject to billions worth of tariffs that didn’t exist last year.

Nonetheless, it would be wrong to dismiss this as a Clayton’s deal. There are real, tangible reductions in tariffs for UK cars, steel and aluminium, and seemingly greater market access for American agriculture, such as beef.

On the other hand, Trump’s 10 per cent blanket tariff on most goods remains in place, which the White House said would raise $US6 billion for government coffers. While the UK would cut its average tariff, the US’ would climb. “Yes, we would like to go further in relation to tariffs,” Starmer later told a sceptical British press pack, stressing the progress made so far would save people’s jobs.

Keir Starmer explains the US trade deal at a Jaguar Land Rover plant in the West Midlands. Credit: Bloomberg

That news conference, hastily convened at a Jaguar Land Rover car plant in the UK’s West Midlands, said much about the nature of this announcement. For both leaders, it was a much-needed piece of political theatre – for Trump, a demonstration that he can and will secure trade deals after backtracking from his shock-and-awe “Liberation Day” tariffs.

For Starmer, whose Labour Party is being out-polled by Nigel Farage’s right-wing Reform UK, a partial win was better than nothing. Pushed by reporters, he said the relevant question was not whether Britain was better off than a year ago but whether it was better off than yesterday. And he gets the symbolic victory of being the first world leader to sign a trade deal with Trump.

That will not inoculate him from criticism. Conservative leader Kemi Badenoch said Britain had been “shafted”, while in the London Telegraph, business columnist Sam Ashworth-Hayes said the UK would still be left billions worse off and Trump had “completely outmanoeuvred” Starmer.

The agreement has implications for Australia and Prime Minister Anthony Albanese. Before Liberation Day, the UK and Australia compared notes and believed they might be the only countries exempted from the tariffs. Trump ultimately decided to grant no exemptions.

The US typically runs a trade surplus with both Australia and the UK, which means Trump has no reason to impose tariffs to correct a trade imbalance. But he did it anyway, and seems poised to retain the 10 per cent baseline for most products.

“This is very bad news for Australia,” says Justin Wolfers, an Australian economics professor at the University of Michigan. “Basically, the Brits got nothing and are stuck with 10 per cent. Given that the UK and Australia are both net importers from the US, it’s likely that we get to the same outcome.”

On the other hand, the deal does demonstrate there’s room to move from the status quo. And we know Australia has an ace up its sleeve – dozens of critical minerals the US desperately wants – that it is preparing to deploy. The danger is that Australia gives away a lot for not much in return.

Wolfers is not convinced there is much to be gained. “Given the stakes, I wouldn’t even bother sending the A-team to negotiate,” he says. “We have a trade surplus with the US, and they want a 10 per cent tariff, and there’s not really much to talk about.”

Albanese is more likely to share the Starmer view: that a job saved is a job saved, and it’s better to pick apart Trump’s tariffs one rung at a time. A capped exemption for steel and aluminium would mirror what Malcolm Turnbull extracted from Trump last time.

Despite its shortcomings, Trump and Starmer claimed this deal as a political triumph. Given the administration’s desire to keep baseline tariffs in place, a few concessions and a press conference might be all that’s up for grabs.

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