Gordon Brown has accused Donald Trump of “weaponising” the global trading system with steep import tariffs that threaten a “breakdown” in the global economic order.
The former prime minister said governments and central banks should come up with a “global rescue plan” comparable to actions taken during the global financial crisis of 2008, including synchronised interest rate cuts to cushion the blow from tariffs.
Echoing concerns among bankers and City grandees that the US tariff regime could cause a second week of turmoil on international financial markets, Brown said action was needed “to get ahead of events” or else a recession could turn into a 1930s style depression.
Brown urged finance ministers and central bankers from around the world to discuss shoring up the global economy when they meet in Washington after the Easter weekend at the annual meetings of the International Monetary Fund and the World Bank.
Brown’s comments, in an interview broadcast on BBC Radio 4 on Sunday, will also add to pressure on the Bank of England’s governor, Andrew Bailey, to loosen monetary policy, after the former deputy governor Charlie Bean last week said the global uncertainty would prevent businesses from investing and slow consumer spending.
Calls for dramatic interest rate cuts to offset the impact of tariffs have intensified since last week when Trump caused turmoil in financial asset prices, after his “liberation day” tariffs prompted fears of a global recession and threatened to spiral into a full-blown financial crisis.
The US president partly retreated from the heaviest tariffs aimed at most countries after a steep sell-off in American government debt and excluded some electronics including smartphones. However, he still imposed 10% tariffs on every country in the world, as well as 145% levies on China, which he sees as the cause of the decline of manufacturing jobs in the US.
The chief executive of JP Morgan, Jamie Dimon, said late on Friday that the cumulative effect was that the US faced a 50% chance of a recession this year.
Peter Navarro, one of the key architects behind Trump’s trade war, said it was “unfolding exactly like we thought it would in a dominant scenario”, in an interview on Sunday with NBC.
He added that the US has “no defence against other than tariffs right now” when confronted with what the US has alleged – with little evidence – are non-tariff barriers, currency manipulation and taxes.
The billionaire investor Ray Dalio on Sunday said he feared a tariff war would accelerate the end of post-second world war trading arrangements and generate conflicts across the world.
Dalio, the founder of hedge fund Bridgewater Associates, separately told NBC that the reinstatement of higher tariff rates after a 90-day pause could be “highly disruptive to the world economy” and could even cause military conflict.
Brown said that Trump had “weaponised” the interdependence of the global trading and financial systems.
Brown served as UK prime minister from 2007 until 2010, with much of his time dominated by the international response to the global financial crisis. He said the trade war would require a similar “synchronised reduction in interest rates” from central banks, with Australia, Canada, the EU, Japan and South Korea among those who could work together.
“It’s got to come from Europe or Britain or perhaps from other parts of the world,” Brown said, with the US and China, the world’s two largest economies, locked in a trade war.
However, some central bankers are cautious about cutting interest rates because of concerns that existing inflationary pressures will be worsened by price rises to pay for tariffs.
Brown acknowledged that inflation could go up, but said the worst effects of the tariff turmoil are yet to filter through from financial markets to living standards.
The UK Labour government under Keir Starmer has so far tried to avoid antagonising the US. Brown said he understood his successor’s strategy, and said it was not yet time for the UK to choose definitively to move away from the US and prioritise European relations.
However, Brown said the UK needed to find partners other than the US to “rebuild the world order” based on the rule of law, human rights and climate action.
More broadly, the world was moving from a “unipolar” order dominated by the US to a “multipolar” one, Brown said.
“The way forward can only be for countries in a multipolar order – if there is going to be order – to talk to each other and work with each other and consult with each other.
“We have to get back to a situation where people are willing to rebuild those blocks of the world order.”
