Return of the Nation State, Part 3 – what’s a Jag worth?

WHY do nation states work? Because there is a chain of accountability, as there are with most successful forms of government. There might or might not be corruption, decision-making might or might not be sound and free speech might or might not be constrained but everyone knows who is in charge and who is responsible when things go wrong.

Supranational organisations really started with the League of Nations. Established after the First World War to prevent another one, its failure became obvious in 1939. The United Nations has not (yet) ended in World War Three, although that’s more due to the realities of nuclear mutually assured destruction than the UN’s ability to impose peace. (Ask any Israeli or Palestinian). There is no single body of international law nor courts to implement them. Moreover UN member states take their legal obligations with varying levels of sincerity.

If the ‘international rule-based order’ can’t look after Joe Public’s economic interest, who can? If you’re American the answer is President Trump. If you’re British the terrifying answer is Rachel Reeves (or her replacement).

Slapping a tariff on something is not penalty-free. Americans who want to buy a Jaguar will have to pay 25 per cent more to own a car they can’t pronounce. How much more will depend on how the increased tariff splits between Jaguar’s margins, the American Jaguar dealer’s margin and the buyer’s pocket.

Ludicrously, it might also depend on how much UK taxpayer money Sir Keir Starmer chips in – but that’s another article in itself. Jaguar Land Rover is owned by the Indian group Tata. It already receives huge government subsidies including £500million in loan guarantees to build a factory in Somerset, as it is the UK’s largest car exporter. Yet its board have decided, or threatened, no longer to sell in the US (25 per cent of Jaguar sales). That’s pathetic for what purports to be a high-value brand – but the Tata organisation is exceptionally talented at extracting concessions and cash from the UK government.

It’s entirely possible that many American Jaguar customers can afford the increase. They may like to pay it as it makes their status symbol that much more impressive. Their Jaguar used to say to their neighbours, ‘I’m doing better than you.’ For 20,000 bucks more, their new one says, ‘I’m really doing better than you.’ That’s good value for those who like that sort of thing. If they can’t afford the tariff they could buy a lower-spec model, which still sends the same message. (Jaguar F-PACE prices in the US range from $57,000 to over $92,000. The best-selling vehicle in the US, the Ford F-150 pickup, costs from $40,000 to $77,000). Those who can’t afford a Jaguar due to the tariff will simply have to buy a F-150 and support American manufacturing – ‘I’m more patriotic than you’ also has value. A US Jaguar owner would retort that the $20,000 he just paid in import duties was also patriotic.

Price is just one aspect of the proposition made to customers. If the customer is wealthy it may not be the most important. People buy cars on a combination of considerations including price, performance, running costs, dealer support, branding, quality, environmental impact, safety and fashion. If Jaguar (or anyone else) is competing only on price they will lose. Rather than whine to the government (yet again) they should improve their offering, which would also garner them more sales in the rest of the world.

Which rather prompts the question of why anyone bothers with trade deals to restrict tariffs. They take ages to negotiate and always include unwanted concessions to secure the alleged benefit. Obviously globetrotting politicians love them and international lawyers thrive on them but, as any post-Brexit British fisherman will tell you, the concessions can outweigh the benefits. Worse, a concession to one country on, say, chlorinated chicken can lead to other countries saying that if chlorinated chicken from America is OK theirs should be too. While Palmerston would have sent a dispatch by gunboat putting them back in their box, today’s spineless modern politicians and their jellyfish advisers would apologise, concede and probably pay damages. They forget who elected them and who pays them.

The UK needs to adjust to the new economic reality imposed by the world’s dominant economy. It must adapt and overcome the frictions. In the US car market all imported cars have been hit with the same tariff. If JLR pulls out, as it says it will, BMW, Porsche and Mercedes will fill the void and weak management will again have cost British jobs. They’ll blame Trump, but they’ll be wrong. President Trump was elected by the American people, that is the American market. While it may be the case that blue-collar workers don’t buy JLR, not every imported-car driver voted Democrat.

The European elite thinks that President Trump is a one-off and that it will all be better after the next election. That’s delusional. It’s entirely possible that the next US President will share the Trump/MAGA agenda and it’s entirely possible that it will be working for America. JD Vance is the clear favourite to be the next President.

If MAGA is working for America, countries with failing economies should take a long, hard look – it might work for them. Instead our lacklustre Prime Minister has threatened to retaliate against America. Trump must be terrified: US GDP is about $30,000billion. UK exports to the USA are just $46billion, 0.15 per cent of US GDP. It’s a rounding error. Starmer could have threatened to sell Diego Garcia to an ally of China, but he’s already done that.

So Starmer is offering JLR ‘support’ while hiking National Insurance, driving up the price of electricity with the ludicrous Net Zero policy and imposing impossible electric vehicle targets on the car industry. He’s proving Ronald Reagan correct – the most dangerous words in business are ‘I’m from the government and I’m here to help.’

Two-Tier should wake up, smell the coffee and realise that the British people voted to return to being a nation state in 2016. He needs to grasp that President Trump has just ended the economic world order and Davos Man (for the latter Trump should definitely get a Nobel Prize). He needs to think that through. While he does, rather than seeking to reintegrate with the EU and prop up a failing company with money he does not have, he could scrap Net Zero, use the savings to cancel the NI hike and slap some import tariffs on the French until they stop the boats.

Of course he can’t; he is an internationalist Marxist lawyer who has no business running the United Kingdom. He won’t be after the next election, which can’t come soon enough.