Trump is about to blow up the spring statement

On Wednesday, Rachel Reeves will stand up and give the spring statement – which is expected to be a series of almost entirely bad news.

She is likely to have to tell the nation that growth is going to be lower than expected, projected government revenues are down, and that she is tackling this with a series of cuts that amount to austerity in everything but name.

It will amount to an unpopular series of contortions to keep the government in line to meet its various fiscal rules, much to the misery of many of the Labour MPs behind her, who thought they were going into politics to bring an end to 14 years of the Conservatives doing exactly this kind of thing – rather than perpetuate it.

But what’s more bizarre is that within a week, Donald Trump may render the whole thing entirely pointless. Trump’s second term has been such a maelstrom of chaos that it can be difficult to keep track of any individual policy area – but the one with the most obvious and immediate effects on the UK and world economies is tariffs.

Trump has been engaged in a tariff hokey-cokey with Mexico and Canada, hiking them up and then reducing them again every few weeks. He has introduced worldwide tariffs on steel and aluminium, and he’s introduced a blanket 20% tariff on imports from China. But on April 2, he’s set to do something so much bigger that most of the global financial system seems to be simply ignoring it in the hope that it doesn’t materialise.

Trump’s stated plan for April 2 is to introduce so-called “reciprocal” tariffs on every nation across the world. In theory, these sound entirely fair – reciprocity means that if you charge a 25% tariff on a product I sell, I will charge the same on that product when you sell it to me.

In practice, suddenly introducing these on every product from across the world at once would still be hugely disruptive – especially since the US deliberately chose to restructure its economy towards hugely profitable services and tech, and to import much cheaper physical goods – but it would at least make some form of sense.

What Trump is doing is much more seismic. His administration has decided that a huge range of things count as tariffs, far beyond the traditional definition.

A tariff is an import tax on a good sold by a foreign country. So if the UK charged a tariff of 25% on US beef, a steak from the US would be taxed at 25%, whereas an identical steak from a British cow would be tax free. This obviously helps the competitiveness of UK farming – that’s often the point of tariffs.

Trump is including taxes like VAT as tariffs, because they add to the cost of an imported good – even though a domestic product also pays VAT. He is also claiming that his new reciprocal tariffs will adjust for currencies he thinks are artificially low against the dollar.

In theory, this would mean the Trump administration would have to do millions, if not billions, of complex calculations for every nation across the world to calculate the correct level of tariffs under the incomprehensible new system. In practice it is simply impossible for any of this to be worked out in time – so the real question is how far Trump is going to go and how much of it he will stick to.

The options range from tariffs that will essentially crater the global economy and cause a worldwide recession with untold damage, to lesser options that will cause economic pain and uncertainty until someone talks Trump out of almost all of the plan.

But the reality is that until we know, what is to come next week on tariffs is on a far, far bigger scale than anything that has happened so far – those were merely the opening skirmishes.

All of this renders the idea of standing in front of parliament and talking about the state of the economy, forecasts for growth, and a series of actions to keep public spending and borrowing just on the right side of delicately calibrated rules feel not a little pointless. It’s like taking your car to the car wash when there’s a hurricane on the way.

Rachel Reeves seems to have decided that her mandate is to run the UK economy exactly as Rishi Sunak would, and to do that as if there are no outside or exceptional forces battering the global economy too.

On Wednesday, her spring statement will likely be judged on those terms, as they’re the ones she’s set for herself. But within just a few days, the sheer pointlessness of it all could be laid bare. Hopefully, among all of the preparation for her set-piece, she’s been making plans to deal with what Trump is set to unleash.