There’s No Taking Back Control in the Trump Vortex

Sovereignty be damned, and why hard power is the only way to get it back

It’s been five months since my last post. It wasn’t meant to be so long, but you lose the habit, take a few weeks off, figure the UK looks a little gloomy, make an excuse, and another week goes by. Still, the Substack algorithm kept whirring and 50+ people have subscribed since that last post – thank you and welcome! To the others who forgot I existed, I plan to start again with semi-regular thoughts on UK markets, economics and policy from a transatlantic view. I’m also going to pick up my A to Z tour through the FTSE 250. If you’re no longer interested, please do unsubscribe.

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I’ve been thinking a lot over the last week about the notion of sovereignty, or as Google puts it, “the supreme authority within a territory… the power to govern, make laws, and manage internal affairs without external interference.”

Sovereignty was one of the rallying cries of Brexit, captured in the leave campaign slogan, “Take Back Control”. Those of us on the other side argued that the sovereignty Brexiteers sought was an illusion. As a medium sized, open economy (and I can’t tell you how many pieces of Ministerial advice I saw beginning with those six words…), the UK would forever be buffeted by forces beyond its control. Yes, in theory it would no longer be beholden to EU rules and regulations, but in practice, that wasn’t going to happen if UK companies wanted to continue trading with their biggest market.

Now I think a lot of the remainer arguments have borne out, certainly in terms of the need to align with EU regulations. But what I didn’t foresee – and I’d argue few did in 2016 – was how secondary Brexit feels to the notion of sovereignty right now, when the biggest infringement on this is coming from across the Atlantic, not the Channel.

Let’s take a few recent examples. Just last week the UK announced it was dropping a demand for Apple to provide a backdoor into encrypted data, which it had previously sought for domestic security purposes. Around the same time, and after much griping by Trump over the lower cost of drugs in other countries, Eli Lilly announced it was increasing the price of Mounjaro in the UK by 170%. Further US demands for ‘most favoured nation’ pricing on drugs could damage one of the biggest benefits of the NHS – its historic ability to negotiate lower drug prices as the only major buyer^[1]. And while the UK’s 2% Digital Services Tax survived the US-UK trade agreement, there seems little prospect of rates going higher, or indeed greater regulation of American technology companies in general, despite 7 in 10 Brits previously saying that social media companies aren’t regulated enough.

There’s a fair question here of whether Trump is different to any US administration before. Despite the Maga notion that America is being taken advantage of, the US has long thrown its weight around the world.

It wasn’t so long ago that Obama and Biden were pressuring the UK to ban the Chinese company, Huawei, from building out the country’s 5G network. And in 2021, the UK agreed to abandon its Digital Services Tax and instead move towards a US-led minimum global corporate tax after pressure from Biden (ditched under Trump).

In foreign policy a long dependence on US military technology was no minor part in the UK committing forces to the 2003 invasion of Iraq. In the opposite direction, go back to 1956 and you have Eisenhower telling the UK and France to get the hell out of Suez or see the US crash the pound.

What feels different today is the uncertainty of US actions and the tools on the table. Previously the US and EU might have gone tit-for-tat in a battle over Airbus and Boeing, but the existence of NATO wasn’t questioned as part of this. Now it’s always on the table, implicit or explicit, whether the issue is domestic policy or international security. Anything the US has any interest in, its security guarantee is fair game.

And so you have the EU pulling back on using any of its economic might and trade retaliation tools, meekly cutting a new deal (which may not be so bad in substance, but the optics didn’t look good) to keep Trump on side. You have UK domestic policy beholden to US views on technology and healthcare. You have European leaders desperately flying to Washington to keep Patriot missiles flowing to Ukraine. Sovereignty, be damned.

I like to think that the bully always gets their comeuppance. When the US needs allies in the future, we turn around and say no. Or we say yes, but here’s the price. But none of that works and nothing changes until the UK and Europe can manage their own security. That’s the only way to stop Trump – or whoever comes after – hanging a permanent noose around our necks.

“Take Back Control” hasn’t played out as Brexiters would have liked, but it’s not for the reasons Remainers might have thought. It is hard, military power, not what trading block we’re part of, that feels the key to sovereignty today. As a former Treasury official who was forever cynical of any “national security” argument for more money, it pains me to write those words, but it’s the world we live in now.

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^[1] I know there are other problems with this system and all the drug companies are griping over it.