Liberal Democrat leader Ed Davey is set to call on Prime Minister Keir Starmer to negotiate a new UK-EU customs union, which he believes could “turbocharge the economy” and provide leverage against potential tariff threats from President-elect Donald Trump.

In a speech scheduled for Thursday in London, Davey will argue that a customs union deal would enable the UK to approach Trump “from a position of strength” rather than weakness. His remarks come as the UK seeks to navigate the shifting dynamics of global trade in the wake of Trump’s election.

Davey will also criticize Conservative leader Kemi Badenoch, accusing her of preparing to go “cap in hand” to Trump to secure any trade deal, and he will aim at Reform UK leader Nigel Farage for his perceived sycophancy towards the incoming president. Davey plans to assert that Farage is “more interested in advancing Trump’s agenda over here than the UK’s interests over there.”

The call for a stronger trade strategy coincides with a report from the Institute for Public Policy Research (IPPR), which warns of a new era of trade turbulence under Trump. The report recommends that the UK bolster its trade defenses to counter potential economic threats, including the imposition of steep tariffs on imports.

Trump has previously proposed tariffs ranging from 10% to 20% on all goods entering the US, with even higher rates for imports from China. The IPPR suggests that the UK should develop mechanisms to respond to such economic coercion, similar to the EU’s recently introduced “anti-coercion instrument.”

In light of these challenges, Davey will urge the UK government to avoid merely “tinkering around the edges” of the existing Brexit deal, calling instead for a more ambitious and positive approach to negotiations with the EU.

Strengthening Ties with Europe

Davey’s speech will highlight the importance of rebuilding the UK’s relationship with Europe as a strategic counterbalance to Trump’s presidency.

“The UK must be far more positive, far more ambitious, and act with far more urgency. That is why, today, I am calling on the Government to negotiate a brand-new deal with the EU this year.”
Ed Davey

He will emphasize that restoring ties with Europe is crucial for protecting the UK economy, enhancing European security, and negotiating with Trump “from a position of strength rather than weakness.”

Taking a direct swipe at Farage and Badenoch, Davey will argue against approaching Trump with desperation.

“The answer cannot be to do what some – like the Leader of the Conservative Party – would have us do. Approach Trump from a position of weakness. Go to him cap in hand and beg for whatever trade deal he’ll give us.
“Nor can we take the Farage approach of fawning over Trump and licking his boots, seemingly more interested in advancing Trump’s agenda over here than the UK’s interests over there.”
Ed Davey

Davey’s speech aims to present a robust case for a customs union with the EU as a foundation for stronger UK trade policies, thereby ensuring that the country is not left vulnerable to external economic pressures.

The IPPR report also sheds light on the economic consequences of Brexit, noting significant declines in trade between the UK and EU since 2021. It underscores the need for the UK to reset its relationship with the EU to mitigate these impacts and bolster its economic resilience.

While Starmer has ruled out rejoining the single market, he has committed to “making Brexit work” by fostering closer cooperation with the EU on various fronts, including trade and security.

Davey’s proposals and the IPPR’s recommendations are critical for the UK as it seeks to redefine its place in the global trading system amidst the uncertainties posed by the Trump administration’s policies.