Why UK needs to stand up to Donald Trump – not fund his tax cuts

Donald Trump’s big, flawed idea is to abolish income tax by using the revenue from tariffs instead. The UK should not meekly concede to his demands

Donald Trump’s presidency of nearly 100 days – in which he has watched the continuing destruction of Ukraine and Gaza, prompted people to take to the streets in protest at the dismantling of vital public services, used coercive behaviour to try to destroy world trade, pressed the UK to decouple from China and loosen its ties to the European Union, and destabilised Nato while embracing Vladimir Putin as a victim, not an aggressor – can only be judged as a serious failure.

The fascination with Trump, especially in relation to tariffs, should not overwhelm our ability to distinguish between the permanent rollercoaster of noise emanating from the White House and the signals of what he is really up to.

What is the extent of Trump’s ambition? A closer look at his avalanche of executive orders – a potential first step towards authoritarianism, avoiding judicial and legislative oversight – suggests a more radical and uncompromising approach than some expected.

The Trump administration has been interfering in UK affairs in a way that suggests our 'special relationship' with the US is over (Picture: Andrew Harnik) | Getty Images

Tax cuts for the rich

Trump hopes to reinvigorate an extreme form of capitalism – less Adam Smith’s “invisible hand”, more an ‘obvious fist’. Dealing with threats to America’s financial security, managing remarkable levels of government debt – that could rise from 124 per cent of GDP to 172 per cent by 2054 – and delivering tax cuts for the wealthy are uppermost in his mind. Comfort for the rich and crumbs for the poor.

Trump’s criticism of the chair of the Federal Reserve, Jerome Powell, suggests the president wants him to resign and hints that he thinks he should decide interest rates, with speculation the US may withdraw from the International Monetary Fund and World Bank.

Not all Trump’s 130 executive orders are controversial – for example, the “White House Task Force on the Fifa World Cup 2026”. However, for those who remember the works of George Orwell, we also have the curiously titled, “Restoring Truth and Sanity to American History”.

Of more significance, however, are his “America First Trade Policy” and “Department of Government Efficiency” – Doge. Driven by Elon Musk, Doge is responsible for the dismantling of ‘Big Government’, and has been destroying public services and sacking tens of thousands of government employees. However, hatred of the state, not increased efficiency, is the real political imperative.

Trump needs trillions of dollars of savings to finance his tax cuts and manage the national debt of $36 trillion (£27 trillion). What passes as the US welfare state, covering Medicaid, Medicare, disability payments and support for veterans, is under severe attack.

Empire-builder McKinley is Trump’s hero

It is, however, the Executive Order dealing with trade that reveals Trump’s plan to get the rest of the world to fund the scrapping of federal income tax in the US or, in the first instance, for anyone earning under $132,000. These extraordinary ideas cannot be easily dismissed and help explain Trump’s obsession with tariffs.

William McKinley, US President from 1897 to 1901 and, like Trump, reportedly of Scottish descent, is Trump’s economic inspiration. McKinley was a fan of tariffs and also added the Philippines, Hawai'i, Guam, and Puerto Rico to US territory, prompting the claim that, during his presidency, “the United States became an Empire”. Trump has suggested that his political hero be sculpted, alongside four other US Presidents, into the Black Hills of Dakota at Mount Rushmore.

Seeking to emulate McKinley, Trump has asked his officials to look at the feasibility of abolishing the Internal Revenue Service (IRS) and creating a “External Revenue Service” instead. As Howard Lutnick, Trump’s billionaire Commerce Secretary said, “in other words, America will raise so much money from President Donald Trump’s tariff plan that Americans will no longer need to pay income taxes”.

This idea was backed up by Trump on social media: “For far too long we have relied on taxing our Great People using the Internal Revenue Services. Through soft and pathetically weak trade agreements, the American economy has delivered growth and prosperity to the world while taxing ourselves. It is time to change. We must begin charging those that make money out of us… and they will start paying.”

Politics of nostalgia

There is, of course, a fatal flaw in this idea. The US would need to import nearly $3 trillion of goods a year. However, incentivising companies to make goods in America could cut imports, so where would the revenue come from? Tariffs would have to be 100 per cent. Prices would have to rise.

The world is in danger of being fooled or used, or both, by an administration seeking to blame others for the precarious nature of the US economy and the financial instability now swirling around the dollar and stock markets.

US political commentator Fareed Zakaria wrote in his Global Briefing: “History is doomed to repeating itself. Trump’s tariffs are fundamentally a politics of nostalgia, looking fearfully at the past rather than confidently at the future.” Trump’s America no longer exists.

An attack on UK sovereignty

As the thinking behind Trump’s tariffs unravels, there appears to be no convincing reason for the UK Government to make anything other than token concessions to US demands. They have gone beyond trade and tariffs, with many aspects of UK national sovereignty under attack.

The US is meddling in our politics by supporting Nigel Farage and questioning government policies on policing and LGBTQ+ issues. Giant US tech firms are demanding digital service tax concessions. And now threats to farming, pharmaceuticals and the safeguarding of access to internet platforms are surfacing in trade talks.

The angry reaction of British people to the US President raises questions about national pride and the political mood. A calm and cautious response risks conceding too much, too early, when new global opportunities are emerging.

Interfering in the politics of our country, undermining our sovereignty and damaging our economy are serious matters. This doesn’t seem like a ‘special relationship’ or the actions of a reliable ally.

Henry McLeish is a former First Minister of Scotland