‘Liberation Day” was, of course, a tragic idiocy based on a bewildering inversion of reality. The rest of the world has not been ripping off or pillaging and plundering the US, as claimed by Trump launching his salvo of tariffs, the highest for a century. The truth is the opposite.

There is no American “national emergency”. The US still represents the same 25% of world GDP, as it did in 1980. More than half the goods it imports are from affiliates of US multinationals denominated and paid for in dollars, so its deficit is an accounting identity with itself rather than reflecting economic weakness.

The richest and most dynamic economy in the world has profited hugely from a global growth-promoting economic order that it created – one of rules-based open trade in goods and services undertaken in dollars. Its fake deficit in goods belies an economic strength that permits the US to be the world’s number one exporter of services in banking, consultancy, media and IT. This American wealth generation machine has been so aggressive in pursuing its self-interest that when taken to the limits – as in its relationship with the UK – its partners become de facto vassal states. Britain has not been pillaging the cream of US tech companies; rather, it has been stripped of its tech jewels by the US.

Even so, the rest of the world has benefited, with Asia in particular bootstrapping itself from poverty over the past 50 years. Certainly, there are American rust belt, manufacturing towns that have done badly – their working-class inhabitants left beached, their interests unprotected by enfeebled trade unions. But the rest of the US prospered, although the country is pockmarked by gross inequalities that American public policy has never properly addressed.

All has been wrecked by the economics of Trump, for whom the idea that trade is a win-win, promoting growth and opportunity, is inconceivable. To him, it is not possible that country A buys goods and services from country B because it offers what A can neither produce or not at such a low price – while A can sell other goods and services to B for the same  reasons. Hence the simple algebra, subtracting imports from exports, and calculating a pro-rata, escalating tariff, is based on the view that a deficit can only exist because the US has been ripped off. Trump wants to put that “wrong” right, with the grotesque result that the richest country on earth is now imposing swingeing tariffs on the poorest – abandoning the global system that, however flawed, has served it and the world well.

Impoverished Lesotho, for example, must be a racketeer with its trade surplus built on its exports of irreplaceable diamonds; hence a tariff of 50%. The reason why Britain is levied a “low” tariff of 10% – the same as Iran – is because on US figures, we run a trade deficit. But Israel, arguably the US’s closest ally, made the error of running a surplus and so received a 17% tariff dictated by the algebra. Brexit did mean Britain was not lumped in with the EU, charged 20% tariff, but being “spared” springs sadly from our trade weakness that Brexit has accentuated. We have lost at least 5% of GDP from leaving the EU; now Trump will cost up to another 1% or worse, according to the National Institute of Economic and Social Research, and more again as the world potentially embarks on a full-scale trade war, heralded by China’s tit-for-tat tariffs on Friday. Equally, there is a growing chance of a full-blown American recession. In his great book The Great Crash, 1929, JK Galbraith wrote that the interaction of the self-feeding unwinding of a stock-market bubble, trade-crippling tariffs, overextended financial institutions, massive income inequality, economic ignorance and collapse of trust in economic leadership that were the proximate causes of the Great Depression would be unlikely to happen again. But he couldn’t be sure that stupid leaders, ignorance, greed and some of the proclivities of American capitalism would not repeat the same mistakes. So here we are in 2025 – doing just that. Britain, as an open economy outside the major trade blocs, is uniquely exposed.

So what to do? What not to do is to accept the Trump framework of trying to get a “deal” by making damaging, unprincipled concessions on standards for food imports, our capacity to regulate the content of digital platforms and our sovereign ability to tax. Only a symmetric, fair deal is in the national interest, and, given Trump’s view of trade, probably impossible.

Instead, Britain has to combine with the G7 (excluding the US) and the EU – and, ultimately, Asia – to sustain a rules-based, open global trading and financial system. In this respect, Mark Carney, if confirmed as Canadian prime minister in its April general election, is pivotal. Well-networked, he is the nearest the west has to a figure combining the insights of Keynes with the capacity as a political leader to make necessary change. Carney’s response to Trump’s menacing threats is to re-orient Canada around a new global trade order he aims to construct – in which Britain is well placed to help.

The first step would be to associate Canada as a privileged trade partner with the EU, as a matter of urgency to which crucially both France and Germany – with its incoming chancellor Friedrich Merz another leader who has seen the light – would surely agree. The next step, to be brokered jointly by Britain and Canada, would be to extend the terms of that association to a newly relevant commonwealth including African members such as Nigeria and South Africaand Asian members such as India, Malaysia, and Australia and New Zealand – keeping Japan and South Korea in the loop. The aim being the sharing of common mutual tariffs and market access rules, but also tough reciprocal sanctions on selected US service exports and a joint approach to challenging US monopoly digital platforms – especially Musk’s X, as the EU is already planning. If, and when, a better US wants to join this trading order, it would be welcomed. Meanwhile, European members should continue to step up their joint defence efforts and sustain Ukraine. Britain can be integral to these initiativesthis. We must introduce a defence levy sharply to raise defence spending and turbocharge our timid efforts to lift public investment to offset recession.

Trump’s America has forfeited global trust. The world has other choices apart from paying tribute to him and his sycophants now running what was once a great country with the prime aim of self-enrichment. Keir Starmer keeps saying he does not want, or need, to make a choice. But stick with the mafia hood? Or create something fresh that works for Britain, the world and the US if it chooses? Of course there is a choice. It is in the national interest to make it.