Brexit brings dire warnings for Trumpism
Leaving the EU was a mistake for Great Britain — and nationalism, isolationism, and anti-immigrant fervor will fail for the US too.
When Britain voted to exit the European Union in 2016, Donald Trump, then the Republican candidate for president, declared himself “Mr. Brexit.” Trump claimed solidarity with the nationalism, isolationism, and anti-immigrant fervor that drove Brexiteers and incorporated it into the America First platform he pursued after winning the 2016 presidential race.
Brits now view their populist experiment as a dismal failure. Champions of Brexit, such as former Prime Minister Boris Johnson, promised that severing political and economic integration with most of the rest of Europe would boost prosperity and self-sufficiency and leave more money for government services.
Instead, the UK economy has stagnated, with income and economic growth lower than it would have been otherwise. Those effects are likely to worsen through 2035. Most Brits now suffer “Bregret,” with polls in early June showing a record 69% of Brits thought Brexit turned out to be the wrong move. The fiasco is a major contributor to the collapse of Prime Minister Rishi Sunak’s Conservative government — and the party’s likely shellacking in the upcoming July 4 election.
It's like watching a laboratory experiment where the guinea pigs die. Yet Trump still sounds like Mr. Brexit, vowing that if he wins a second term, he will impose even more trade barriers, more isolation, and more go-it-aloneness than he did during his first term.
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Trump wants to add new tariffs of 10% on all imports to the United States while raising the China tariff by 60%. There’s no evidence the tariffs Trump imposed during his first term accomplished anything, other than raising costs on Americans and impeding economic growth a bit. Yet Trump is undeterred.
Trump also promises severe new limits on immigration to the United States, along with the unprecedented deportation of migrants with expired visas or other unauthorized status. This despite gads of evidence that immigration has been an important driver of growth, employment gains, and government tax revenue since COVID-era restrictions on inbound migration ended.
Wall Street is booing much of Trump’s economic agenda. Businesses like the lower taxes and lighter regulation that Trump offers. But they generally hate his protectionism and other Brexity impulses.
Goldman Sachs and Morgan Stanley have both published recent analyses warning investors to prepare for slower growth and higher inflation if Trump wins. Inflation has sharply retreated from its 2022 peak of 9%, prompting hopes the Federal Reserve may soon start cutting interest rates, which would be a much-needed break for homebuyers and other borrowers. But Oxford Economics points out that the prospect of Trump-flation might force the Fed to postpone cuts longer than it would otherwise — and even raise rates further if Trump forces prices up through tariffs and other measures.
Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards
The parallels between Brexit and Trumpism aren’t perfect, but there’s one very clear common thread: longstanding and widespread disgust with the status quo. In America, Britain, France, Germany, and elsewhere, millions of voters — in some instances, a critical mass — feel the system is rigged against them and current leaders are part of the scam.
Immigrants are easy bogeymen for pandering politicians. In the UK leading up to the 2016 Brexit referendum, many Brits felt resentful toward immigrants from poorer European nations who took advantage of Britain’s national health system and other government benefits. Keeping some migrants out would mean giving up the many benefits of belonging to the EU trade union, but a majority felt it would be worth the cost. Boris Johnson, then-UKIP leader Nigel Farage, and other Brexiteers hammered the idea that the UK would be better off with fewer migrants.
Trump, of course, peddles a similar message. “He opened the borders,” Trump said of Biden, at the July 27 presidential debate. “We have to get a lot of these people out and we have to get them out fast.” Even Biden seems to recognize how concerned US voters are with migration, given that he has now issued an executive order that slashed the number of border crossings.
One lesson of Brexit, however, is that silver-bullet solutions rarely work.
Leaving the EU turned out to be an immensely complex undertaking that blew trade efficiencies to bits and generated none of the better alternatives its backers promised. Businesses are begging Britain to somehow undo the undoing, or they might have to leave.
Inbound migration, meanwhile, hit new record highs after the UK finally departed the EU in 2020. COVID and other changes drove some of that, but it also turned out that British businesses needed more lower-cost workers than the Brexit masterminds envisioned. Since lower migration was an explicit goal of the scheme, Brexit brought Brits loads of unintended consequences without the intended ones.
Why would the United States ever want to replicate such a mess?
Oh, we wouldn’t, Trump and his fellow isolationists insist. We’re bigger and more powerful than the UK. Other nations will have no choice but to deal with us on our terms. We can raise costs in one place because we can offset them in another.
Amexit will be much better than Brexit.
There’s a better way to deal with the real problem of middle-class Americans who are falling behind. Keep what works — free trade and legal immigration, among them — and tackle market failings one at a time. There are many intelligent proposals to fix the broken parts of the immigration system, to target China’s abuses and trade practices, and to raise working-class living standards. But those solutions are weedy, un-flashy, and far too tedious for Mr. Brexit.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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